Reference no: EM132783508

Which factors would an auditor most likely consider when setting the preliminary judgement about the materiality? 

1. The dollar amount of asset based on annualized interim financial statements.
2. The type of client's industry
3. Management characteristics obtained from understanding of client's business and industry
4. The number of client's employees

An auditor may decide to assess control risk at the maximum level for certain assertions because the auditor believes

1. Control activities are unlikely to pertain to the assertions.
2. The entity's control environment, accounting system, and control activities are interrelated.
3. Sufficient evidential matter to support the assertions is likely to be available.
4. More emphasis on tests of controls than substantive tests is warranted.