Anne Aylor Case - 1 Essay

In today’s world, the role of IT has turned accounting estimated critical in financial reporting and disclosure. Houghton and Fogarty have said that non-accurate or incorrect estimates have often caused to misstatements in audit report (Gray & Manson, 2007).

12.2 Auto Parts, Inc. . . . . . . . . . . . . . . . . . . . . . . . . Considering Materiality When Evaluating Accounting Policies and Footnote Disclosures

Jews have perished because of their beliefs since the beginning of time but never have so many Jews been persecuted worldwide as they were in World War II. Anne Frank’s diary reaches a place within all of our hearts because it reminds us how easily the innocents can suffer. Sometimes we may choose to close our eyes or look the other way when unjustifiable things happen in our society and Anne’s tale reminds us that ignorance, in part, claimed her life. Sadly, her story is but one of many of those who died in the Holocaust and as with other Jews, her fate was determined by the country she lived in, her sex and her age.

Also he may conduct bank reconciliations on pertinent accounts to make sure no discrepancies or misstatements are found. The auditor should also perform vertical and horizontal analysis for the income statements and balance sheets by the use of ratios.

) There was a lack of adequate cut-off procedures to ensure the timely recording of certain period-end accruals. This resulted in an audit adjustment of $3,578,000. The benchmark for overall materiality is $3,508,000, I would consider the audit adjustment of $3,578,000 a material misstatement. Control environment, principle 2 the board of directors and management exercise oversight of development and performance of internal controls. Due to the severity and material weakness of lack of adequate cutoff procedures to ensure timely recording of period end accruals. Management and the board of directors should evaluate performance of internal control activities including adherence to standards of conduct and expected levels of competence. In

4. Additional testing may still be required even if the error is corrected by the client. Many other errors during the month of April could have occurred on the accounting clerk’s watch that the auditor needs to do further testing to be sure no material misstatements are present. Some of these testing could be seeing what other duties the accounting clerk had during that month. Checking the client’s internal control for the entire entity could also be necessary to ensure that controls are in place for training employees that may need to fill the roles of a peer.

3. AASB 1031 materiality. Planning materiality and performance materiality – are only for auditors. Planning materiality – one base for the whole statement. For public companies – net profit since people are more focussed on that only if it is stable, if not pick total revenue or total assets. Used for financial statements as a whole.

Evaluating the Reasonableness of the Accounting Estimates, and Determining Misstatements: the auditor shall evaluate, based on the audit evidence, whether the accounting estimates in the financial statements are either

17) The risk that the auditor will NOT detect a material misstatement that exists in an assertion is

The auditor should consider planning materiality. When a financial statement account exceeds the planning materiality, that account should be considered significant for both the audit of internal control over financial reporting and the financial statement audit. The more the account exceeds planning materiality, the greater it should be considered significant.

During the performance of this integrated audit, require numerous judgments about the internal control and overall financial reporting and how well it addresses risks of material misstatements within the financial statements (AICPA, 2014). After re-evaluating the previous errors found from the previous audit, the audit team found the corrective actions to be appropriate and justified in elimination of human error by implementing additional checks and balances within the manual process. No additional misstatements have been found and all internal controls off the financial reporting seem appropriate and just.

B) I think the auditors should have equal responsibility for detecting material misstatements due to error and fraud. It’s their job to make sure the financial statements are as accurate as possible. Although it may be hard to check all the information from a company it’s the responsibility of the auditor to sign off that everything is in check.

The objective in setting tolerable misstatement for individual balance sheet accounts is to provide reasonable assurance that the financial statements taken as a whole are fairly presented in all material respects at the lowest cost. Factors to consider when setting tolerable misstatement for accounts

Swoosh! Splash! Swish! A pirate ship sails through the salty ocean. Three pirate ships sail across the same deep glimmering marine. They all meet around the cove, but they all get ready for rivalry. One ship starts dismissing their cannons at their enemies. Just then, the other two ships began to sail away, but one cannonball proceeded towards one ship, and struck the ship leaving it to sink. Pirates used ships to get to their destination, and to be ready for their enemies.

The FASB provides guidance for measuring materiality in an audit. Materiality incorporates professional judgment in practice; however, factual information and the consideration of the needs of the users of financial statements provide a guideline for measurement. The prevailing methods of measurement incorporate quantitative and qualitative characteristics of