ACCT 107 Lecture Notes - Lecture 31: Audit Risk, Relative Volatility, Loan Covenant
21 Oct 2020
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Materiality (cas definition): misstatements, including omissions, are considered to be material if they, individually or in aggregate, could reasonably be expected to influence the economic decisions of users taken on the basis of the fs. Judgements are made in light of the circumstances surrounding the entity and are. Materiality decisions throughout the audit process include: Report to those in charge of governance. The above decisions form benchmarks to evaluate the results of audit testing, to make conclusions (on the fs, disclosures, specific balances) and to complete the audit. If the auditor finds a material misstatement, they must bring it to the client"s attention -> if they don"t correct it, a modified opinion must be issued. Overall materiality: materiality for the fs as a whole. Bank (most interested in total assets, wonder if they meet their asset based loan covenant, want to know if they should recall loans or continue to lend)
