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PLANNING
Materiality
Information is material if its omission or
misstatement could influence the
economic decision of users taken on the
basis of the financial statements.
Materiality
Materiality may be viewed as:
The largest amount of misstatement that the
auditor could tolerate in the financial statements,
The smallest aggregate amount that could
misstate the financial statements
Planning
Stage Determine the tolerable misstatement-
Account Balance Level
Is the
differenc YES
Design more extensive
e
substantive tests
significa
nt?
NO
Audit Plan
The overall audit plan sets out in broad terms the
nature, timing and extent of the audit procedures
to be performed.
Audit plan varies for each client, it should be
sufficiently detailed to guide in the development
of an audit program.
Audit Program