What factors make materiality decisions complex and judgmental?
Answer to relevant QuestionsShould the materiality of misstatements be considered individually or combined to be considered in aggregate with other misstatements when considering whether the financial statements are misstated? When is a misstatement ...During the course of auditing year-end financial statements, the auditor becomes aware of misstatements in a company's financial statements. When combined, the misstatements result in a 4% overstatement of net income and a ...Assume the company's stock price goes down in a bear market that occurs at the end of the year. However, the stock price more than doubles in the next year. The company recognized goodwill impairment at the end of the year ...SEC Accounting and Auditing Enforcement Release No. 904 describes KPMG's 1993 audit of Structural Dynamics Research Corporation (SDRC). The AAER describes SDRC as a client that inflated revenues and earnings by recognizing ...Auditors need to determine appropriate benchmarks in setting overall materiality. What would be an appropriate benchmark for a profit-oriented entity or an entity whose debt or equity securities are publicly traded? A ...
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