Audit Planning Practice Test

An auditor is determining planning materiality for the audit of a nonissuer not-for-profit organization. The organization has volatile annual results due to unpredictable grant revenue; current-year change in net assets is near breakeven, but total expenses are stable and total assets are significant. Which factor is most critical in determining materiality?

During planning of an audit of a nonissuer regional bank, the auditor learns the bank launched a new online account-opening platform late in the year and relies on automated identity verification and automated posting of new-account deposits to the core system. Management reports several customer complaints about duplicate postings and notes that the IT change was implemented on an accelerated timeline with limited user-acceptance testing. Based on these circumstances, how should the auditor adjust the audit plan for identified risks?