Auditing and Assurance course.

1 3-30 Suppose that you are the auditor of a major retail client who has reported the fol- lowing income before taxes (IBT) for the rst two quarters of the year: 1st 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. Par! 2 Audit Planning and Basic Auditing Concepts Required: Determine the amount of overall materiality for the audit based on these preliminary amounts