1.6 - Materiality, Audit Risk, & Audit Evidence - An Overview of Auditing for Auditors

[@mnumzanandumela4031]

Thi is Awesome, all your videos are Sensational to watch and more understanding. Thank you

[@jaspreetkaurdeol6103]

excellent explanations, thank you sir!

[@PatrickLeeCPA]

Appreciate you watching! Hopefully my other videos are just as useful.

[@megmaharg8918]

I am planning to take the CPA exam. Thanks for the simplified explanation. But very helpful.

[@kboone8739]

Thank you for the explanation!

[@davidmutua3240]

thank you for your explanation very ,very well done.

[@PatrickLeeCPA]

Thank you for watching. Glad you were able to get some great information out of this lesson. I hope you enjoy my other videos on my channel.

[@albertchachawambura9093]

Very good explanations of concepts. Thank you!

[@yuisato931]

Thank you so much for your videos! I'm preparing for my audit internship, and your videos help me a lot. Is materiality decided by companies or auditors?

[@PatrickLeeCPA]

I'm so glad!

[@yuqiandeng8496]

very useful

[@petercheelo1214]

I'm enjoying the videos no need of going for class

[@christinatang7346]

your videos help alot thank you!

[@mariahfeliciano835]

Thank you so much for this video! As a student, you have helped me understand accounting easier. I do agree with you that the materiality level and the audit risk level have a direct relationship, meaning, if materiality level is high, there is also a high audit risk, and vice versa. However, the standards say that these two have an INDIRECT relationship. Would you mind expounding more on this?

[@mariahfeliciano835]

Is it not that you are implying these two have a direct relationship when you said “if we want to lower our risk, we’re gonna have to lower our materiality”

[@PatrickLeeCPA]

@@mariahfeliciano835 I think your second point is what I was trying to say. If we want to lower our audit risk we need to reduce our materiality. By reducing our materiality, we now care more about our numbers and if our financial statements are over the materiality then we know we have a problem. Audit risk should have a direct relationship with materiality in that if we want more risk, then we should increase materiality (which you would never be in that situation). If we want lower risk, we need a lower materiality so we can test more things. This area gets more confusing when we talk about detection risk and other similiar topics, but your second thought was correct.

[@sohrabwardak]

Great... I enjoyed from your lecture alot... by the way I am Sohrab Wardak working as Senior Auditor with Afghanistan Supreme Audit Office (SAO), I am CGAP certified. My question is about Planning Materiality and Performance Materiality... can you do lecture about that.???

[@PatrickLeeCPA]

So I can't do it any time soon since I'm working on Financial Accounting stuff, however, Planning Materiality is the materiality that we would use based on our assessment in the planning stages. Performance Materiality is the actual materaility that we would use once we are testing the balances. I would almost look at the planning materiality as the worst case we would accept before we reject the financial statements as a whole whereas performance materiality that we adjust so that we come below the planning and that's what we actually use when we test accounts.

[@sohrabwardak]

@@PatrickLeeCPA its okey... We are practicing it in SAO... Althought it is developed by International Auditing Advisers here.... since you are very good in explanation... so i requested so... by the way thanks for your quick reply...

[@mariusshomeya9604]

Are there any video transcripts available? These videos are great for revision purposes.

[@PatrickLeeCPA]

Hi Marius, there is not. These were originally posted for my students to review a few years back. I am still working on some new material for other courses that I teach.

[@thislife1980]

this helped a lot