tl Part 5 Materiality Considerations (20 points) 1. Define the term "Materiality" 2. The concept of Materiality is considered to have a "Qualitative" dimension. Explain what is meant by this term, give an example. 3 Briefly explain the relationship between "materiality and the amount of audit work (ie. evidence) done on an audit 4. Discuss the Tolerable Misstatement situation shown below The auditor determines materiality for the company being audited to be $60,000. Tolerable misstatement of $30, 000 is assigned to each of the following four accounts. Unknown errors in each of the accounts are indicated below, Audit work is performed on each account as discus ed n class. The client makes any corrections to accounts as suggested by the auditor. After the completion of audit work, the auditor issues an unqualified i.e. GoOD) auditors' opinion-Was this the correct opinion? Discuss and show applicable calculations Account Unknown error in accourt before any audit work is done rall accounts are overstated) s 50,0oD Cash Accounts receivable Prepaid Assets Property, Plant and Equipment 36.000 5,000 12,000