This is an auditing question.

Questions:

How does each event affect audit materiality (increase, decrease or no impact)?

Phil, an audit senior at KMC Partners (???) is currently reviewing the materiality level for one of his clients, Sali Ltd (Sali). In March 20X6, Sali decided to move from the SuperD IT system to the SuperB IT system. The expected completion date of the transition was June 20X7. Due diligence was performed on the new system and another auditor (PGD) was engaged to perform data migration work. KMC liaised with PGD on several occasions to obtain access to their workpapers in order to obtain sufficient appropriate audit evidence around the data migration. No major issues were noted. Ten well-regarded staff members of Sali were made redundant in April 20X7, and as a result, staff morale is very low at Sali. Employees are wondering who will go next, and do not feel that their jobs are safe. Most of them are putting in extra hours, but despite this, the lack of motivation is seriously impacting the quality of their work. Some senior staff members have decided to search the current job market for another suitable positions It is now 8 July 20X7 and the audit team is currently finalising its substantive testing and tests of controls. Phil becomes aware of the following events