Q2What is the relationship between materiality and audit risk? How does an auditor determine materiality level? How does risk and materiality effect the auditors approach? What is the difference between tests of control and tests of detail? Describe test of controls and substantive procedures for cash account. What is the purpose of determining the matters to be considered in the audit of businesses using a service organization? Explain what audit evidence is and why it is important? Explain the factors that effects the appropriateness and sufficiency of audit evidence? Who owns the audit files? Under what circumstances they can be used by other people? Explain the external confirmation process that needs to be conducted in the audit of bank account.What are the auditor's views on the initial engagement and opening balances, explain the auditors opinion relating to these circumstances. When is it appropriate to examine the entire population of items that make up an account balance or class of transactions during the audit procedures?Compare statistic and non-statistic audit sampling.