When planning the audit of Theador Inc. for the upcoming year, the audit manager computed 5% of net income to get to a materiality level of $575,000.

Required:

a. Explain the concept of planning materiality.

b. If an error of $100,000 was found, it would not be considered immaterial on a quantitative basis. However, what other qualitative factors should be considered by the auditor before reaching this conclusion?