materiality

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December 2, 2015 at 9:27 am #286926
jingdong
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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
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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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