Reference no: EM133168972

Question -

1. What risks should be considered when materiality is determined? Identify at least seven risks applicable to the case study.

2. Briefly list and discuss the five or six most important critical factors or risk areas that will likely affect how the audit is conducted.

3. Quantify the risks regarding management issues, accounting environment, operating environment and audit issues and determine a general risk level of the '4-Airlines' audit, on an evaluation scale from one to five. (please use the risk assessment sheet given in the appendix)

4. Show the impact of the analysis you have performed within task 3 on the materiality.

5. Determine the materiality, as well as other materiality-related aspects according to ISA 320 (e.g. performance materiality), relying on the information presented within the case study and the annexes.

6. Describe the relevance of the materiality in planning the audit engagement and specify if the materiality determined based on the unaudited financial statements can be changed while the audit is in progress.

7. While performing the audit, the team identifies five errors related to the valuation or the disclosure of the items in the financial statements. What is the impact of the identified errors on the audit opinion from the standpoint of materiality?