Determine the calculation of materiality
For example:
Turnover 1% -1.5%
Net assets 1% -2%
Net profit 2% -6%
Whatever numbers are selected they would be based on reliability and confidence the auditor places on
- Department manager's integrity (for example motive to maximise profits because bonus linked?)
- The quality of the financial statements (for example qualified staff to produce the accounts?)
- Any other factors affecting the auditor's judgement.