In this mini-case you will determine overall materiality as well as tolerable misstatement amounts for balance sheet accounts of EarthWear Clothiers, Incorporated Most auditing firms use a simple approach for establishing planning materiality and tolerable misstatement similar to the one illustrated in your textbook. This case illustrates such an approach, with some additional guidance from Willis & Adams relating to the amount of tolerable misstatement to allocate to various balance sheet accounts based on difficulty to audit and expected misstatement, and limiting the total amount of tolerable misstatement to about ten times materiality.)

Using your completed Excel file, answer the questions presented below.

The fields below will be populated automatically as you complete the assigned workpapers. You may need to resize the rows to display your complete answer. Input your responses below into Connect.

Measurement Base

Factors that you considered to determine the appropriate measurement base

Percentage Applied Note: Round your answer to 1 decimal place.	%

Factors that you considered to determine the appropriate percentage applied

Planning Materiality	$

Total Amount of Tolerable Misstatement Allocated To Balance Sheet Accounts	$

Ratio of Total Tolerable Misstatement to Planning Materiality Note: Round your answer to 1 decimal place.

Willis & Adams Tolerable Misstatement Guidelines
*	Tolerable misstatement should be between 50% and 75% of planning materiality.
**	Tolerable misstatement should not exceed 25% of the account balance
***	The total amount of tolerable misstatement allocated to balance sheet accounts should be below ten times materiality in order to limit aggregation risk.

Please use this template in conjunction with Willis \& Adams Materiality Guidelines. The materiality factors provided are guidelines only and should be used only as an aid as you use professional judgment to determine planning materiality. 3. Justify/Support Your Level of Planning Materiality State the factors that you considered to determine the appropriate measurement base and percentage to determine planning materiality. EARTHWEAR CLOTHIERS Allocation of Materiality: Tolerable Misstatements December 31, 2022 (In thousands) Please use this template in conjunction with Willis \& Adams Materiality Guidelines. The materiality factors provided are guidelines only and should be used only as an aid as you use professional judgment to determine planning materiality. 3. Justify/Support Your Level of Planning Materiality State the factors that you considered to determine the appropriate measurement base and percentage to determine planning materiality. EARTHWEAR CLOTHIERS Allocation of Materiality: Tolerable Misstatements December 31, 2022 (In thousands)