Problem:
Assume that for an audit of a local company, auditors concluded that inventory has a very high risk of material misstatement, while receivables have a moderate risk of material misstatement. Which of the following methods of allocation of planning materiality between inventory and receivables would likely be acceptable in an audit? Group of answer choices Allocate more planning materiality to inventory than to receivables Allocate planning materiality to inventory and receivables in proportion to their size None of these Both A & B