You are the audit department manager at BDC & Co, a firm of Chartered Certified Accountants, and you are in charge of giving support and advice to new members of the firm. Thabang Kgari, a new audit junior at BDC & Co, has requested you to answer some questions about the challenges he's faced in his first few weeks on the job.

Explain the importance of reviewing materiality by auditors during an audit process.

Our organization BDC & Co audits Stage Works (Pvt) Ltd, an events company. Bathosile intends to hold a national conference where a variety of speakers will address the latest financial reporting, tax, and auditing rules. Since the business model is in our area of business, most of our audit clients would be interested in this idea, one of our auditors advises that our company should invest in this business opportunity, recruit speakers, and market the event to our audit clients. Our company and Stage Works Ltd would split earnings on a 1:2 ratio. Comment on the implications of this salable initiative for BDC & company.?

Glits Co ltd, a key client, is requesting a loan from its bank to fund a plant expansion project. This project is expected to enhance Glit's capacity by 20%. BDC & Co conducted market research and informed the board that Glits Co would be able to sell the increased output. Mr Namushe, the finance director, recently called you and requested a reference from your audit firm regarding Glits Co’s capacity to meet its obligations and the feasibility of the business idea. Your audit team is getting ready to start the audit for the fiscal year that concluded on February 29, 2020. Discuss any ethical and professional matters raised in the above case.

Answer rating: 100% (QA)

Question Explain the importance of reviewing materiality by auditors during an audit process Answer ISA 200 Overall objectives of the independent audit and the conduct of an audit in accordance with I... View the full answer