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
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
Logic behind the inverse relationship btw audit risk and materiality
higher the audit risk
Amount set to the materiality level will be lower
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.
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
Thank you so much sirr
Sir u take offline classes?
Is there any paid classes?
27:01 useless logic 😂😂😂