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Materiality & business risks p7

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Materiality & business risks p7 Materiality & business risks p7 Presentation Transcript

  • MaterialityISA 320 Audit Materiality
  • uMateriality u
  • u MaterialitySize & Nature in given circumstances u
  • u MaterialitySize & Nature in given circumstances Auditor Judgement u
  • u Materiality tettet Guidelines NO rules Relative u
  • uMaterialityThresholds b u b
  • uMaterialityThresholds Vary firm to firm b u b
  • uMaterialityThresholds Vary firm to firm b Ranges u b
  • uMaterialityThresholds Vary firm to firm b 1-2% Revenue Ranges u b
  • uMaterialityThresholds Vary firm to firm b 1-2% Revenue Ranges 5-10% PBT u b
  • uMaterialityThresholds Vary firm to firm b 1-2% Revenue Ranges 5-10% PBT u 5-10% Assets b
  • u MaterialitySize & Nature in given circumstances u
  • u Materiality Size & Nature in given circumstancesThe more subjective the more flexible on materiality u
  • u MaterialitySize & Nature in given circumstances u
  • u Materiality Size & Nature in given circumstancesSignificance of item? (Directors bonus) u
  • u MaterialitySize & Nature in given circumstances u
  • u Materiality Size & Nature in given circumstancesImpact on FS (turns profit to loss? or alters trends) u
  • uMateriality u
  • uMateriality Planning u
  • u Materiality PlanningMateriality Thresholds for FS as a whole u
  • uMateriality u
  • uMateriality Performance u
  • u Materiality PerformanceImmaterial errors added together problem u
  • u Materiality PerformanceImmaterial errors added together problem Lower than overall materiality u
  • u Materiality PerformanceImmaterial errors added together problem Lower than overall materiality Can vary from area to area u
  • u Materiality PerformanceImmaterial errors added together problem Lower than overall materiality Can vary from area to area Revise as audit progresses u
  • BUSINESS RISKSChanges in regulations, demand etc
  • BUSINESS RISKS Changes in regulations Interest Rates Employees Failure to modernise Fashion / trends CEO reliance Price wars Gearing
  • PILOT PAPER Q1 a
  • December 10 Q1 a
  • June 09 Q1 a
  • BUSINESSUnderstanding
  • BUSINESSUnderstanding Discuss with Management
  • BUSINESSUnderstanding Discuss with Management Discuss IC with IA
  • BUSINESSUnderstanding Discuss with Management Discuss IC with IAAnalytical Procedures (ISA 520)
  • BUSINESSUnderstanding Discuss with Management Discuss IC with IAAnalytical Procedures (ISA 520) Observation (visits etc)
  • BUSINESS Understanding Discuss with Management Discuss IC with IA Analytical Procedures (ISA 520) Observation (visits etc)Inspection (manuals, plans & reports)
  • BUSINESS Understanding Discuss with Management Discuss IC with IA Analytical Procedures (ISA 520) Observation (visits etc)Inspection (manuals, plans & reports)
  • BUSINESSUnderstanding (ISA
  • BUSINESSUnderstanding (ISA 1. External Factors
  • BUSINESSUnderstanding (ISA 1. External Factors2. Company Structure & A/C Policies
  • BUSINESSUnderstanding (ISA 1. External Factors2. Company Structure & A/C Policies 3. Objectives and Risks
  • BUSINESSUnderstanding (ISA 1. External Factors 2. Company Structure & A/C Policies 3. Objectives and Risks4. Measurement of Performance (KPIs etc)
  • BUSINESSUnderstanding (ISA 1. External Factors 2. Company Structure & A/C Policies 3. Objectives and Risks4. Measurement of Performance (KPIs etc) 5. Internal Control
  • BUSINESSUnderstanding (ISA 1. External Factors 2. Company Structure & A/C Policies 3. Objectives and Risks4. Measurement of Performance (KPIs etc) 5. Internal Control
  • June 09 Q1 a