The objective of this study is to address the gap that exists in the literature regarding quantifiable guidelines, benchmarks and consistency of applications. During the research acceptable benchmarks for the calculation or quantification of the elements linked to materiality and audit risk were found. The benchmarks are in compliance with the practices and the requirements of the ISAs and regulations. Models and benchmarks based on literature were used as a basis and modified for application in the auditing environment. The combination of literature, responses from public practitioners and experience based on best practices resulted in the development of a modified risk-based assessment model. The conclusion from the empirical study indicated that there are no defined rules or basis for calculating materiality and audit risk. The inconsistencies in responses indicate that audit firms and developer of key concepts interpret and apply the above-mentioned term different in practice. The interpretations of the relevant ISAs, appear to be conceptually correct as no major non-compliances were identified. Various instances indicated that there is a lack of guidance with regard to the quantification or qualification of benchmarks. The implementation of the Sarbanes-Oxley Act (2002) was an event that leads to the consideration of more conservative benchmarks. The most consistent benchmark that stood the test of time was Discussion paper 6 (1984). The 30 years since the development of these benchmarks indicate that little attention has been given to one of the most complex issues in auditing. Companies within different industries are not generic and exceptions will occur where the auditor needs to apply professional judgment to accommodate the deviations. Further research is required to assist the audit professionals and students in the development of consistent benchmarks to increase the reputation of the profession. The conclusion drawn from this study is that audit materiality and audit risk has a significant impact on the audit process as even the audit report is influenced by proper audit planning and guidelines to support the auditor in audits. / MCom (Accountancy), North-West University, Vaal Triangle Campus, 2013

The objective of this study is to address the gap that exists in the literature regarding quantifiable guidelines, benchmarks and consistency of applications. During the research acceptable benchmarks for the calculation or quantification of the elements linked to materiality and audit risk were found. The benchmarks are in compliance with the practices and the requirements of the ISAs and regulations. Models and benchmarks based on literature were used as a basis and modified for application in the auditing environment. The combination of literature, responses from public practitioners and experience based on best practices resulted in the development of a modified risk-based assessment model. The conclusion from the empirical study indicated that there are no defined rules or basis for calculating materiality and audit risk. The inconsistencies in responses indicate that audit firms and developer of key concepts interpret and apply the above-mentioned term different in practice. The interpretations of the relevant ISAs, appear to be conceptually correct as no major non-compliances were identified. Various instances indicated that there is a lack of guidance with regard to the quantification or qualification of benchmarks. The implementation of the Sarbanes-Oxley Act (2002) was an event that leads to the consideration of more conservative benchmarks. The most consistent benchmark that stood the test of time was Discussion paper 6 (1984). The 30 years since the development of these benchmarks indicate that little attention has been given to one of the most complex issues in auditing. Companies within different industries are not generic and exceptions will occur where the auditor needs to apply professional judgment to accommodate the deviations. Further research is required to assist the audit professionals and students in the development of consistent benchmarks to increase the reputation of the profession. The conclusion drawn from this study is that audit materiality and audit risk has a significant impact on the audit process as even the audit report is influenced by proper audit planning and guidelines to support the auditor in audits. / MCom (Accountancy), North-West University, Vaal Triangle Campus, 2013

In this thesis I focus on the audit of financial statements from the perspective of the auditor. The first part contains the definition of basic theoretical concepts in this area and a description of audit procedures. This knowledge is used in the practical part for audit verification of operations with fixed assets in a particular entity. According to the findings I draw conclusions and proposals for solutions of deficiencies.