During the course of an audit engagement, an independent auditor gives serious consideration to the concept of materiahty, a concept that is inherent in the work of the independent auditor and is important for planning, preparing, and modifying audit programs. The concept of materiality underhes the application of all the generally accepted auditing standards, particularly the standards of field work and reporting.

Required:

1. Briefly describe what is meant by the independent auditor's concept of materiality.

2. What are some common financial statement relationships and other considerations used by the auditor in judging materiality?

3. Describe how the planning and execution of an audit program might be affected by the independent auditor's concept of materiality.