Reference no: EM131633021

Question - Assume you are a staff accountant working for Kim & Kirkpatrick, Inc. (K&K), a small publicly traded company that will soon have its financial statements audited by a local CPA firm, Young, Mitchell, and Gregory. Eleanor Lee, a rising manager at K&K, expects to work closely with the auditors. Ms. Lee has a general business background and several years experience working for K&K, but her knowledge of auditing is limited. She sees you in the hall one day, and during the conversation, she tells you she is confused about a term she's heard of that will somehow affect the upcoming audit. The term she refers to is materiality. You talk with her briefly about materiality, but as she walks away she still seems to be a little confused. Later she asks you to write her a memo explaining the concept of materiality and possible ways it might affect the audit of K&K. Write the memo, inventing any details you need to make your discussion clear and readable.