Question 1 (18 marks): 1.1 In the audit of sales account, the amount presented on the financial statement is $1,000,000. You are the auditor and you have determined the level of materiality of sales account to be $100,000. Required: a. Based on your understanding, how would the auditor have done to determine this amount of materiality of 100,000? (1 mark) b. What does this materiality level of $100,000 mean to the auditor and the audit. Explain in details. (5 marks) C. Assuming you select some invoices and check with the sales journal and have detected that client did not record a sale transaction of $96,000 that actually occurred during the financial year. (7 marks) - What is the type of audit procedures that you are using? What management assertion is violated (i.e. at risk) by the misstatement? - What would you do if you have determined that this is an error (an unintentional mistake) - What would you do if you have determined that this misstatement is intentionally done by the client's Board of Directors to reduce their income tax liability. Also indicate the type of fraud in this situation under Australian auditing standards (ASAS). 1.2 One of your friends who has not studied auditing tells you that accounting and auditing are the same as they all involve financial statements and accounting standards. Please explain to him based on your understanding in this unit