Describe two factors that you considered when assessing acce…
Describe two factors that you considered when assessing acceptable audit risk for this audit. Be sure to link to the case facts provided (generic responses that are not specific to this case will not be awarded any marks). (4 marks) [Only the first two will be marked]
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Comment on the most appropriate base you would use to calculate materiality, and use it to calculate overall materiality for the current year’s audit. Be sure to explain why you chose the base you did, and justify ALL parts of your calculation. Be sure to show your detailed calculation and make an overall conclusion, including any qualitative factors you considered. (8 marks) Recall that the most common bases used are as follows: 3 – 7% of pre-tax profit (net income before taxes) 1 – 3% of total assets 3 – 5% of shareholders’ equity 1 – 3% of revenues or expenses I’ve included another copy of the client’s trial balance for you (below).
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