You are the audit manager in charge of the 31 December audit of Pacific-Chow Pty Ltd, a large private company operating in the boutique food and beverages market. The audit is now nearing completion and you are preparing a schedule of adjustments to discuss with the client. The schedule of adjustments includes the following:
Which of the above items, if any, do you believe require adjustment? Explain
Your partner had originally set a preliminary materiality level for the audit of Pacific-Chow Pty Ltd at $3000000. After your review of inherent risk your partner has lowered this materiality level to $1600000. Outline how the new lower materiality level will affect the nature and extent of audit procedures planned.