ACC491 Sweet Truths Simulation Assessing Materiality and Risk

Introduction

The concept of materiality is important in the context of auditing.

Materiality is a function of the time, the situation, and the people involved. Below I will explain why certain accounts have to be audited 100 percent and why materiality is allocated only to those accounts that are sampled. I will also explain if there is any component of audit risk within the control of the auditor. Lastly, I will explain how the three risks that make up audit risk inter-relate.

Simulation

For Sweet Truths, certain accounts such as cash, lines of credit, and intangibles have to be audited 100 percent because they are generally composed of few transactions that are easy to verify. Plus these accounts are relevant to the...