Auditing and Assurance Services 1st Edition by Iris Stuart

Exercise 22

Materiality and audit opinions. Describe how materiality is used in (1) planning and performing the audit and (2) evaluating evidence gathered during the audit process.
a. Provide an example describing how materiality might be used in planning and performing the audit.
b. Provide an example describing how materiality might be used in evaluating the results of test work in the audit of the revenue business process.
c. Should an auditor issue an unqualified opinion if the evidence gathered during the audit indicates that the dollar amount of misstatement in the financial statements is material Explain your answer. What should the auditor do in this situation
d. Can an auditor issue an unqualified opinion gathering only internal control evidence for some business processes Explain your answer.
e. Can an auditor issue an unqualified opinion after gathering only substantive evidence for some business processes Explain your answer.
f. Can an auditor issue an unqualified opinion based on a combination of internal control and substantive testing How does the auditor combine the results from internal control testing and substantive testing to keep audit risk to an acceptably low level