Page 102 - Auditing Standards

As of December 15, 2017
a. The materiality level or levels and tolerable misstatement were established initially based on

estimated or preliminary financial statement amounts that differ significantly from actual amounts.

b. Events or changes in conditions occurring after the materiality level or levels and tolerable
misstatement were established initially are likely to affect investors' perceptions about the company's

financial position, results of operations, or cash flows.

Note: Examples of such events or changes in conditions include (1) changes in laws,
regulations, or the applicable financial reporting framework that affect investors' expectations

about the measurement or disclosure of certain items and (2) significant new contractual
arrangements that draw attention to a particular aspect of a company's business that is
separately disclosed in the financial statements.

.12 If the auditor's reevaluation results in a lower amount for the materiality level or levels or tolerable

misstatement than initially established by the auditor, the auditor should (1) evaluate the effect, if any, of the
lower amount or amounts on his or her risk assessments and audit procedures and (2) modify the nature,

timing, and extent of audit procedures as necessary to obtain sufficient appropriate audit evidence.

Note: The reevaluation of the materiality level or levels and tolerable misstatement is also relevant to the

auditor's evaluation of uncorrected misstatements in accordance with AS 2810. 6

Footnotes (AS 2105 - Consideration of Materiality in Planning and Performing an Audit):

1 AS 2810 establishes requirements regarding the auditor's consideration of materiality in evaluating audit
results.

2 TSC Industries v. Northway, Inc., 426 U.S. 438, 449 (1976). See also Basic, Inc. v. Levinson, 485 U.S. 224
(1988).

3 TSC Industries, 426 U.S. at 450.

4 Appendix B of AS 2810.

5 AS 2201.20.

99