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If in question they say materiality is to be calculated on revenue basis,
And later on we see in question while assessing for risks, revenue is misstated (overstated) that’s means what we calculated materiality on revenue at planning stage was on wrong amount.
So what will we do, will we reverse misstated amount of revenue to calculate correct materiality? Like they say we review and change materiality level through out audit.It should be considered throughout the audit but in practice it would have to be a sizeable misstatement to merit changing materiality. Consider what a pain it would be to change sample sizes once tests have been done.
So this isn’t something you should worry or bother about in the AAA exam.
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