1. When planning the audit, the independent auditor considers what would make the financial statements materially misstated. Can an audit be conducted efficiently without specifying materiality before...

1. When planning the audit, the independent auditor considers what would make the financial statements materially misstated. Can an audit be conducted efficiently without specifying materiality before starting specific audit procedures? Explain. What is the risk to the audit if materiality is not specified in advance of conducting audit procedures?

2. The audit risk model operationalizes a risk-based approach of selecting the amount of detailed testing necessary for an audit to be effective.

Discuss the following:

(a) The components of the audit risk model.

(b) The relationship between these components.

(c) What criticisms can be made of the audit risk-based approach?