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Emma's Designs is a for-profit clothing manufacturer. The components of its financial statements are: (1)...

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Accounting

image Emma's Designs is a for-profit clothing manufacturer. The components of its financial statements are: (1) income before taxes = \$3.5 million, (2) total assets =$33 million, and (3) total revenues =$95 million. Emma's Designs is considered a moderate-risk audit, but Accounts Receivable is deemed to have a higher risk of misstatement. a. Determine overall materiality and tolerable misstatement. Justify your decisions. b. During the course of the audit, Emma's CPA firm detected one misstatement in a key customer's Accounts Receivable equal to $90,000. The firm also detected a second misstatement in Cash equal to $10,000. Evaluate the audit findings. Justify your decisions

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