As you told in the class that there is an positive relationship between the audit risk and the materiality level. My point is that the Standards on Auditing was bulit on the basis of practicality that we face while we are doing the audit. Then in that case, while we are doing the audit, if we found that the misstatements at the assertion level is lower than the Specific Performance Materiality but in aggregate if we felt that they are more than the Specific Performance Materiality which may leads to higher audit risk, then to reduce the audit risk to an acceptable level, we will decrease the Materiality level. Therefore from this prespective, there is an inverse relationship between audit risk and materiality.
@@LiKaSeNioRNo pa if we have high audit risk , we are expected to reduce the materiality level....so that we can reduce over risk . If high audit risk materiality will be low so it has inverse relationship
Audit risk is the risk of mms and detection risk , if the materiality is kept higher , we would leave the smaller misstatements so technically the audit risk wil become higher if the materiality is kept higher so direct relationship context that u explained actually makes sense sir ! They shd have given a caution that in real world thsi might be inverse in some cases as generally ppl try to misstate smaller amts cumulatively rather than higher amts individually theres a practical case going on rn in the name Myv3ads sir theyve misstated or to avoid sebi regulations they have 100s of bank accounts to collect money instead of 1 account cause theres a limit to accepting public deposit under sebi guidelines so theres a case going on right now in 2024 regarding this
In my opinion the inverse relationship between materiality and audit risk is correct Example: -if the material amt is 1Cr then then there might be very less chance that audit may fail to identify and modify the opinion (Audit risk) so less risk -if the material amt is 1L then there might be more changes auditor may unknowingly fail to modify the opinion (Audit risk) so high risk
Logic behind the inverse relationship btw audit risk and materiality
higher the audit risk
Amount set to the materiality level will be lower
Sir, Please make a marathon video For CA final Audit and Gst
It will help us a lot for coming may exams
As you told in the class that there is an positive relationship between the audit risk and the materiality level. My point is that the Standards on Auditing was bulit on the basis of practicality that we face while we are doing the audit. Then in that case, while we are doing the audit, if we found that the misstatements at the assertion level is lower than the Specific Performance Materiality but in aggregate if we felt that they are more than the Specific Performance Materiality which may leads to higher audit risk, then to reduce the audit risk to an acceptable level, we will decrease the Materiality level. Therefore from this prespective, there is an inverse relationship between audit risk and materiality.
No Reducing Materiality Reducing Audit risk , So it is a direct relationship
@@LiKaSeNioRNo pa if we have high audit risk , we are expected to reduce the materiality level....so that we can reduce over risk . If high audit risk materiality will be low so it has inverse relationship
Audit risk is the risk of mms and detection risk , if the materiality is kept higher , we would leave the smaller misstatements so technically the audit risk wil become higher if the materiality is kept higher so direct relationship context that u explained actually makes sense sir !
They shd have given a caution that in real world thsi might be inverse in some cases as generally ppl try to misstate smaller amts cumulatively rather than higher amts individually
theres a practical case going on rn in the name Myv3ads sir theyve misstated or to avoid sebi regulations they have 100s of bank accounts to collect money instead of 1 account cause theres a limit to accepting public deposit under sebi guidelines so theres a case going on right now in 2024 regarding this
In my opinion the inverse relationship between materiality and audit risk is correct
Example: -if the material amt is 1Cr then then there might be very less chance that audit may fail to identify and modify the opinion (Audit risk) so less risk
-if the material amt is 1L then there might be more changes auditor may unknowingly fail to modify the opinion (Audit risk) so high risk
It is all a matter of interpretation.
I agree that you are a CA ! Such a stylish profession ! But work on your accent a lil bit so we can understand.
Thank you so much sirr
Is there any paid classes?
Sir u take offline classes?
27:01 useless logic 😂😂😂