Chapter $3$ Mini$-$Case Overall Materiality and Tolerable Misstatement

In this mini$-$case you will determine overall materiality as well as tolerable misstatement amounts for balance sheet accounts of

EarthWear Clothiers, Incorporated Most auditing firms use a simple approach for establishing planning materiality and tolerable

misstatement similar to the one illustrated in your textbook. This case illustrates such an approach, with some additional guidance from

Willis & Adams relating to the amount of tolerable misstatement to allocate to various balance sheet accounts based on difficulty to

audit and expected misstatement, and limiting the total amount of tolerable misstatement to about ten times materiality.

INSTRUCTIONS:

Please download the files below to complete the audit tasks associated with this mini$-$case. The Excel workbook contains the

instructions and workpapers you are to complete.

$11$e$\_$Ch$3\_$Mini$\_$case$\_$Materiality.

Materiality Guidelines

Using your completed Excel file, answer the questions presented below.

The fields below will be populated automatically as you complete the assigned workpapers. You may need to resize the rows to

display your complete answer. Input your responses below into Connect.

Measurement Base

Factors that you considered to determine the appropriate measurement base