Question 1

What is audit materiality?

Accepted Answer

Materiality is the threshold above which a misstatement would influence the decisions of financial statement users. ISA 320 benchmarks include 5% of pre-tax profit, 0.5-1% of revenue, or 1-2% of total assets. Performance materiality is typically 50-75% of overall materiality.

Question 2

How is audit sample size calculated?

Accepted Answer

For attribute sampling: n = (confidence factor / tolerable error rate) x (1 - expected error rate). For monetary unit sampling, sample size depends on book value, tolerable misstatement, and risk of material misstatement. Our calculator applies AICPA standard tables.

Question 3

What is Benford's Law in auditing?

Accepted Answer

Benford's Law states that in naturally occurring financial data, the leading digit 1 appears about 30% of the time, digit 2 about 18%, and so on. Significant deviation from Benford's distribution in an account balance can indicate manipulation or fraud and warrants further investigation.

Question 4

Are these auditing tools free?

Accepted Answer

Yes - completely free, no sign-up required. Results export to CSV or PDF.

Free Auditing Tools & Calculators

Auditing calculators grounded in ISA standards

Auditing Tools - FAQ