You are the auditor of Sunshine Ltd (Sunshine), a publicly listed company. Sunshine has a major shareholder that controls its board of directors. The following financial information has been extracted from the client’s accounting records:

Account	Forecast 30 June 2022 ($000)	Actual 30 June 2021 ($000)
Revenue	490	440
Total assets	610	560
Net assets	312	285
Profit before tax	63	51

Sunshine is a manufacturer that sells mainly to the infrastructure construction industry. The national economy is currently static and consumer confidence falling in the last two quarters. Sunshine has an internal audit function that in previous years you have assessed as effective. Your experience with the company in past years has also shown that its annual forecasts are generally reliable.

Required:

1. Based on above information, suggest an appropriate benchmark (base) for determining preliminary materiality for Sunshine. Give reasons
2. List FIVE factors you would consider in determining materiality for the audit for the period ended 30 June 2022 and explain how those factors affect your assessment of materiality.

Answer rating: 100% (QA)

Account Forecast 30 June 2022 000 Actual 30 June 2021 000 Revenue 490 440 Total assets 610 560 Net assets 312 285 Profit before tax 63 51 1 Based on a... View the full answer