Week 2 -1

Question 1

Overall materiality

Answer 1

Probably influences judgement of users

Question 2

Performance materiality

Answer 2

Reduce probability that aggregate of uncorrected and undetected misstatements exceeds materiality

Question 3

Clearly trivial

Answer 3

Clearly inconsequential, whether taken individually/ aggregate and whether judged by any criteria.

Question 4

Different materialities

Answer 4

Quantitative
Qualitative
–>
Examples:
 Flip loss – profit
 Debt covenants
 Management compensation
 Related party transactions

Question 5

Tolerable error affected by

Answer 5

o Cost of procedures
o Variability in the balance

Question 6

difference materiality accounting standard (IFRS) and GAAS

Answer 6

IFRS is based on management perspective and GAAS is focused on audit perspective