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My doubt may across as silly but I just wanted to confirm, the materiality we calculate in the Q1 scenario, should that be applied when discussing the business risks?
As per my understanding, we should not use materiality rather we should use analytical trends for these risks.
It’d be great if you can clarify, TIA!
Short answer – materiality as an audit concept is relevant only to RoMM (so has nothing to do with business risks).
Longer answer …
When discussing business risks, it is essential to focus on the specific context of the scenario and evaluate the risks based on their potential impact on the financial statements. While materiality is an important aspect of audit planning, it is not the primary focus when discussing business risks. Instead, you should use analytical procedures, trends, and ratios to identify and assess the risks. Materiality is more relevant when determining the significance of misstatements and their potential impact on the financial statements. So, while materiality plays a role in the overall audit process, it is not the main focus when discussing business risks.
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