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7 Materiality and Risk - Pearson

Materiality and Risk 7 Two of the fundamental concepts that underlie the logic of the audit process are Materiality and risk. So far, we have discussed planning and the auditors assessment of client business risk, fraud risk, and the risk of material misstatement. This chapter will help you understand the audit risk model and how the risk of mate-rial misstatement is used to determine an acceptable detection risk, which forms the basis of the audit strategy. We will also examine Materiality and consider its role in planning the audit and evaluating the results of tests.

7 Materiality and Risk T wo of the fundamental concepts that underlie the logic of the audit process are materiality and risk. So far, we have discussed planning and the auditors’ assessment of client business risk, fraud risk, and the risk of material misstatement. This chapter will

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