Question

1 In the audit of sales account, the amount presented on the financial statement is $5,000,000....

1 In the audit of sales account, the amount presented on the financial statement is $5,000,000. You are the auditor and you have determined the level of materiality of sales account to be $50,000.

Q. What does this materiality level of $50,000 mean to the auditor and the audit. Explain in details.

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Answer #1

As per the SA 320 Materiality in Planning and Performing An Audi

Materiality is not related to certain sum of amount . It is based on the auditors judgement and is affected by auditors perception of the financial information needs of users of the financial statements.

Materiality depends on the size of the organisation and effectiveness of the internal controls in the organisation.

If the misstatements are above 50000 then there should be a risk of material misstatements.

Materiality is consider for a single transaction or for the whole of the organisation depends on the auditor.

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