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Dear Sir,
Kindly make me understand the meaning of ” Inverse Relationship between Degree of Audit Risk & Materiality Level”with the help of Example. I am unable to understand it.
with regards
Deep
If audit risk is large, as an auditor you will be worried so will be fussier about errors you are looking for. Therefore instead of looking at balances over $5,000 (say), you will begin to do more work and look at balances over $2,000 (say).
So, as audit risk increases, the materiality level falls.
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