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materiality

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA AA Exams › materiality

  • This topic has 1 reply, 2 voices, and was last updated 9 years ago by Ken Garrett.
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  • December 2, 2015 at 9:27 am #286926
    jingdong
    Participant
    • Topics: 89
    • Replies: 115
    • ☆☆☆

    Dear Sir , would you pease help me, the higher the risk, the lower the level of overall materiality, i thought that the higher the risk, the higher the level of overall materiality. because the auditor will judge the level of materiality depending on the nature and amount of misstatement, would you please explain to me?
    many thanks

    December 2, 2015 at 11:42 am #286952
    Ken Garrett
    Keymaster
    • Topics: 10
    • Replies: 10594
    • ☆☆☆☆☆

    Let’s say the audit risk is low. That might mean that the auditor looks only at purchase transactions over $1,000.

    If the audit risk is higher, the auditor woudl want to look at more transactions so woudl reduce the materiality level (level = figure) to perhaps $500.

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