1. As stated in ASA 320;

"The auditor's determination of materiality is a matter of professional judgement, and is affected by the auditor's perception of the financial information needs of users of the financial report."

(AUASB, 2015)

With reference to the statement above from ASA 320, define materiality and discuss how the "needs of users" will affect how materiality is determined.

2. What is the purpose of tests of controls? With reference to the three (3) main risk components of the Audit Risk Model, explain the circumstances where it is NOT appropriate for the Auditor to test the controls of the client entity.