Audit Materiality & business risks p7

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  • Audit Materiality & business risks p7

    1. 1. MaterialityISA 320 Audit Materiality
    2. 2. uMateriality u
    3. 3. u MaterialitySize & Nature in given circumstances u
    4. 4. u MaterialitySize & Nature in given circumstances Auditor Judgement u
    5. 5. u Materiality tettet Guidelines NO rules Relative u
    6. 6. uMaterialityThresholds b u b
    7. 7. uMaterialityThresholds Vary firm to firm b u b
    8. 8. uMaterialityThresholds Vary firm to firm b Ranges u b
    9. 9. uMaterialityThresholds Vary firm to firm b 1-2% Revenue Ranges u b
    10. 10. uMaterialityThresholds Vary firm to firm b 1-2% Revenue Ranges 5-10% PBT u b
    11. 11. uMaterialityThresholds Vary firm to firm b 1-2% Revenue Ranges 5-10% PBT u 5-10% Assets b
    12. 12. u MaterialitySize & Nature in given circumstances u
    13. 13. u Materiality Size & Nature in given circumstancesThe more subjective the more flexible on materiality u
    14. 14. u MaterialitySize & Nature in given circumstances u
    15. 15. u Materiality Size & Nature in given circumstancesSignificance of item? (Directors bonus) u
    16. 16. u MaterialitySize & Nature in given circumstances u
    17. 17. u Materiality Size & Nature in given circumstancesImpact on FS (turns profit to loss? or alters trends) u
    18. 18. uMateriality u
    19. 19. uMateriality Planning u
    20. 20. u Materiality PlanningMateriality Thresholds for FS as a whole u
    21. 21. uMateriality u
    22. 22. uMateriality Performance u
    23. 23. u Materiality PerformanceImmaterial errors added together problem u
    24. 24. u Materiality PerformanceImmaterial errors added together problem Lower than overall materiality u
    25. 25. u Materiality PerformanceImmaterial errors added together problem Lower than overall materiality Can vary from area to area u
    26. 26. u Materiality PerformanceImmaterial errors added together problem Lower than overall materiality Can vary from area to area Revise as audit progresses u
    27. 27. BUSINESS RISKSChanges in regulations, demand etc
    28. 28. BUSINESS RISKS Changes in regulations Interest Rates Employees Failure to modernise Fashion / trends CEO reliance Price wars Gearing
    29. 29. PILOT PAPER Q1 a
    30. 30. December 10 Q1 a
    31. 31. June 09 Q1 a
    32. 32. BUSINESSUnderstanding
    33. 33. BUSINESSUnderstanding Discuss with Management
    34. 34. BUSINESSUnderstanding Discuss with Management Discuss IC with IA
    35. 35. BUSINESSUnderstanding Discuss with Management Discuss IC with IAAnalytical Procedures (ISA 520)
    36. 36. BUSINESSUnderstanding Discuss with Management Discuss IC with IAAnalytical Procedures (ISA 520) Observation (visits etc)
    37. 37. BUSINESS Understanding Discuss with Management Discuss IC with IA Analytical Procedures (ISA 520) Observation (visits etc)Inspection (manuals, plans & reports)
    38. 38. BUSINESS Understanding Discuss with Management Discuss IC with IA Analytical Procedures (ISA 520) Observation (visits etc)Inspection (manuals, plans & reports)
    39. 39. BUSINESSUnderstanding (ISA
    40. 40. BUSINESSUnderstanding (ISA 1. External Factors
    41. 41. BUSINESSUnderstanding (ISA 1. External Factors2. Company Structure & A/C Policies
    42. 42. BUSINESSUnderstanding (ISA 1. External Factors2. Company Structure & A/C Policies 3. Objectives and Risks
    43. 43. BUSINESSUnderstanding (ISA 1. External Factors 2. Company Structure & A/C Policies 3. Objectives and Risks4. Measurement of Performance (KPIs etc)
    44. 44. BUSINESSUnderstanding (ISA 1. External Factors 2. Company Structure & A/C Policies 3. Objectives and Risks4. Measurement of Performance (KPIs etc) 5. Internal Control
    45. 45. BUSINESSUnderstanding (ISA 1. External Factors 2. Company Structure & A/C Policies 3. Objectives and Risks4. Measurement of Performance (KPIs etc) 5. Internal Control
    46. 46. June 09 Q1 a

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