3-30.............

(AICPA, adapted ) 3-30 Suppose that you are the auditor of a major retail client who has reported the following income before taxes "(IBT) for the first two quarters of the year: Ist quarter = $1,200,000 and 2nd quarter = $1,500,000. You are in the process of establishing overall materiality for the client. Based on prior years, the client has a 10% decline in IBT from the 2nd quarter to the 3rd quarter. You also know that IBT in the 4th quarter increases by 25% over the 3rd quarter. Required: Page 92 Determine the amount of overall materiality for the audit based on these preliminary amounts. 2 3-31 For each of the following scenarios, perform the three steps in the materiality process: (1) determine overall