What quantitative and qualitative factor cause audit partner

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Assignment

Your firm has done the audit of Smart Fashions for many years. You are the senior in charge of the audit this year and are responsible for the fieldwork. Smart Fashions manufactures high fashion clothing. Its shares are publicly traded however the majority of the common shares are held by family members (founders of Smart Fashions). During the current year Smart Fashions lost a major department store as a customer and they have not been able to replace its' revenue. This loss has caused Smart Fashions to downsize and operate at a smaller scale. Its strategy now is to operate a few of their best selling lines which represents about 50% of their sales from the prior year. Prior years materiality was $100,000. The audit partner has determined the current year materiality to be $50,000.

Required:

Discuss what quantitative and qualitative factors caused the audit partner to determine the decrease in the current year materiality.

And

What impact will this lower materiality have on your current year audit procedures?

Reference no: EM131283667

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