Question: W/P ref: 21 Prepared by Date prepared: Cloud 9 Ltd. December 31, 2020 Setting materiality Users Financial statement area of most concern te the user

W/P ref: 21 Prepared by Date prepared: Cloud 9 Ltd. December 31, 2020 Setting materiality Users Financial statement area of most concern te the user Base selected for planning materiality (PM) aDehro TOxe Justification for selection Calculation of PM Current Year Prior Year Trial balance amount: Normalizing adjustments (that is, non-recurring items) Annualized (if required): Benchmark applied Calculated materiality Conclusion: PM materiality is Performance materiality: 70% x Conclusion: Performance materiality is Discussion points Consider how you will use the planning materiality in your audit. What factors might lead you to increase or decrease the planning materiality amount? Are there qualitative factors that could impact your materiality decision? 10 Cloud 9 Ltd.-An Audit Case Study W/P ref: 21 Prepared by Date prepared: Cloud 9 Ltd. December 31, 2020 Setting materiality Users Financial statement area of most concern te the user Base selected for planning materiality (PM) aDehro TOxe Justification for selection Calculation of PM Current Year Prior Year Trial balance amount: Normalizing adjustments (that is, non-recurring items) Annualized (if required): Benchmark applied Calculated materiality Conclusion: PM materiality is Performance materiality: 70% x Conclusion: Performance materiality is Discussion points Consider how you will use the planning materiality in your audit. What factors might lead you to increase or decrease the planning materiality amount? Are there qualitative factors that could impact your materiality decision? 10 Cloud 9 Ltd.-An Audit Case Study

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