Audit: Evaluating Materiality and Key Assertions in Financial Statements

Running head: AUDIT
Audit
Name of the Student:
Name of the University:
Author’s Note:
Course ID:

1AUDIT
Table of Contents
Introduction:....................................................................................................................................2
Section 1:.........................................................................................................................................2
Section 2:.........................................................................................................................................7
Section 3:.........................................................................................................................................9
Conclusion:....................................................................................................................................12
References:....................................................................................................................................13

2AUDIT
Introduction:
The overall assessment directly aims in evaluating audit materiality which is present in
the financial statement of an organization. Moreover, adequate calculations are conduct for
detecting the level of materiality present in an organization. For the more the items significant to
audit are also discussed such as contingencies, and provisions. Besides preliminary analytical
review are also discussed India relevant financial performance of the organization is evaluated to
identify the presence of material misstatement and key assertions. Henceforth, relevant cash flow
statement evaluation has been conducted for identifying the current cash position of the
organization. The auditor's report is also evaluated to detect the relevant carrying values and
other accounting measures taken by the company.
Section 1:
Materiality level is a significant Measure which is used by auditors for analyzing
financial statement of the organization. The main objective of the material level is to evaluate the
financial report and enable concerns for the financial report which might incur during the
formulation. Adequate relationship between audit risk and materiality risk, which relatively
increases the risk of material and hence hampers the quality of the financial report. Material is
considered to be one of the major factors which negatively e affects the financial report of
organization. Furthermore, the presence of material ATI and Audit risk helps in determining the
extent timing and nature of the audit procedures that has been conducted by the auditors for
evaluating the current financial position of the organization (Coetzee & Lubbe, 2014).

3AUDIT
The below information provides the overall level of materiality that is allowable under
different segments of the financial report. The preliminary level of activities that is conducted
financial statement is considered planning material which is relatively allows the auditors to
analyses and identifies the mistakes statements in the annual report. The process directly allows
your detail to detect the level of fraud or errors that has been included in the financial statements
of the organization. However, establishing the preliminary assessment of materials is considered
by gathering adequate management information, qualitative factors, and other deviations from
normal activities. Moreover, the material is computed on the basis of the following estimates,
where the values need to be within the range of the defined materiality value.
 0.5% to 1% of the gross revenue
 1% to 2% of the total assets
 2% to 5% of the shareholder’s equity
 5% to 10% of the net profit
Basis Amount Materiality
Lowest Highest
0.5% to 1% of the gross revenue 1489.8 7.449 14.898
1% to 2% of the total assets 2522.5 25.225 50.45
2% to 5% of the shareholder’s
equity 1550.2 31.004 77.51
5% to 10% of the net profit 486.2 24.31 48.62
The above table provides information about the overall materiality level of Ansell
Limited for the financial year of 2018. The calculations direct indicated that the overall
percentage of 7.49 need to be the lowest cross value and 14.98 needs to be the highest gross
value values that can be material in state. The material misstatement conditions of total assets are
also calculated where people use of the total assets can alter Between 25.225 and 50.45, where