Auditing Assessment of Materiality PDF

Added on - Dec 2020

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Auditing
TABLE OF CONTENTSINTRODUCTION...........................................................................................................................1MAIN BODY..................................................................................................................................11. Preliminary assessment of materiality for the financial reports..............................................12. Analytical review of income statement items..........................................................................23. Income statement account that appear to be at risk of material misstatement.........................54. Audit procedure for assertions.................................................................................................65. Appropriateness of audit partner's suggestions........................................................................7CONCLUSION................................................................................................................................7REFERENCES................................................................................................................................8
INTRODUCTIONAuditing is a process of analysing financial statements of an organisations and findingout the relevancy of transactions recorded in books. An auditor is a person who is responsible toexamine annual reports of a company and provide judgement whether reports are transparent ornot. Owner of a business enterprises hire external auditors to study financial reports and give anindependent opinion of performance and financial status of the company. In Australia companiesare directed to follow Australian accounting standards and corporation act 2001 (Arens, Elderand Mark, 2012).In this project report different topics are discussed such as preliminary assessment ofmateriality, analytical review of income statement, trend analysis of income to appear the risk ofmaterial misstatement, audit procedure to evidence identified assertion and appropriateness ofthe audit partner's suggestions.MAIN BODY1. Preliminary assessment of materiality for the financial reportsPreliminary assessment:It is a process of measuring and reviewing the informationwhich has been provided by managers or owners of a company. It can also be defined asinvestigation in which an auditor is responsible to figure out material misstatements in financialreports that are done knowingly or unknowingly (Preliminary assessment, 2018).In this case the audit partner has suggested that the budget for whole process ofpreliminary assessment of materiality is $15000. The budget for this process is sufficient as theauditor will not have to study the reports deeply, but only have to find out misstatement ofmaterials whether that are done deliberately or unknowingly. In this process the auditor does nothave to analyse all transactions, just have to find that what are the misstated transactions.Evidence for this process is as follows:ParticularAmountInitial meeting$350Preliminary survey$7000Advice and informal communication$150Discussion draft$4000Final material misstatement report$35001
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