Question 2: Materiality: The business provides you with the following financial information: Forecast Actual Accounts/Amounts ($M)...

 

Transcribed Image Text:

Question 2: Materiality: The business provides you with the following financial information: Forecast Actual Accounts/Amounts ($M) 31 March 2024 30 June 2023 Net Assets/Equity Net Profit Revenue Total Assets 351 299 (134) 206 652 691 751 Use the following table to calculate your answer: Rules of thumb for planning materiality. Adapted from Table 4.1: Gay & Simnett Bases (2018) Percentage (%) Net Profit 5-10 Total Revenue 0.5-1 Total Assets 0.5-1 Equity 1-2 624 Question: Determine an appropriate materiality threshold for this audit. Explain the judgements, any assumptions and the approach you take in determining the materiality threshold. You should show your working for the relevant calculation. (9 marks) Question 2: Materiality: The business provides you with the following financial information: Forecast Actual Accounts/Amounts ($M) 31 March 2024 30 June 2023 Net Assets/Equity Net Profit Revenue Total Assets 351 299 (134) 206 652 691 751 Use the following table to calculate your answer: Rules of thumb for planning materiality. Adapted from Table 4.1: Gay & Simnett Bases (2018) Percentage (%) Net Profit 5-10 Total Revenue 0.5-1 Total Assets 0.5-1 Equity 1-2 624 Question: Determine an appropriate materiality threshold for this audit. Explain the judgements, any assumptions and the approach you take in determining the materiality threshold. You should show your working for the relevant calculation. (9 marks)

Answer rating: 100% (QA)

Determining Materiality Threshold Approach We will consider multiple bases Net Profit Revenue Total Assets Equity and their corresponding percentage r... View the full answer