On the audit of Megna Ltd. the audit partner on the engagement set the preliminary level of audit materiality at TK. 10 crore. After the partner reviewed the audit senior’s assessment of inherent risk, he decided that the materiality level should be increase to Tk 15 crore. Required: (hint: Audit Risk) 1) What is the relationship between materiality and audit risk? 2) How will this new level of materiality affect the nature and extent of auditing procedures?

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