threshold will vary to influence users of the financial statement. For example‚ the magnitude of a misstatement that will influence users of the financial statement will change based on how the entity is performing in the industry. c. Most misstatements affect both a balance sheet an income statement account due to the dual entry method. So‚ auditors must design a audit plan to detect the smallest misstatement that will influence users of the financial statement. d. A risk of management fraud will affect
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Anne Aylor‚ Inc. Determination of Planning Materiality and Tolerable Misstatement MARKS. BEASLEY· FRANK A. BucKLEss ·STEVEN M. GLOVER· DouGLAS F. PRAWITT LEARNING OBJECTIVES After completing and discussing this case you should be able to [1] [2] Determine planning materiality for an audit client Provide support for your materiality decisions [3] Allocate planning materiality to financial statement elements INTRODUCTION j-- Anne Aylor‚ Inc. (Anne Aylor) is a leading national
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other factors being equal‚ which of the following would lead to a larger sample size? A. Greater reliance on internal accounting controls. B. Greater reliance on analytical review procedures. C. Smaller expected frequency of misstatements. D. Smaller measure of tolerable misstatements. 4. Which of the following sample planning factors would influence the sample size for a substantive test of details for a specific account? A. A Above. B. B Above. C. C Above. D. D Above. 1 5. In statistical
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how the business compares to others in the same industry. Also‚ misstatement of $1‚000 to a large company is not material whereas $1‚000 to a smaller company could be considered material. 1c. The materiality base with the smallest threshold is generally used because it is important that the auditors find small misstatements that could ultimately influence users of the financial statements. Plus‚ if they find many small misstatements in the financial statements‚ they could add up to make a huge impact
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meeting | |Report (Form 51)(s 142). | |must be held | |Restriction on |No prospectus or Statement in Lieu of Prospectus|A prospectus in lieu of prospectus must be issued before issuing any | |Allotment of shares. |is required to be issued when allotting shares. |shares of securities. S50 | |
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Advertisement: A company during the subscription period must not advertise by thanking the public for their overwhelming response. Applying mode: A company must issue a prospectus‚ which provides information on how the investor should apply for the shares. Public offer size: A company‚ in the first page of the prospectus must state the size of the public offer and the value of shares. Listing Procedure To get the listing permission from the stock exchange‚ a company has to undertake
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components of inherent risk‚ control risk‚ and detection risk. The risk of material misstatement may be separated into two components-inherent risk and control risk. Both inherent risk and control risk exist independently of the audit of financial statements‚ or in other words‚ the risk of misstatement exists regardless of the audit being done or not. Inherent risk is the possibility of material misstatement of an assertion before considering the clients internal control. Factors that affect this
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PUBLIC OFFER OF SECURITIES—AN ANALYSIS T.V. GANESHAN CS Introduction Section 67 of the Companies Act‚ 1956 contains the provisions wherein when an offer of shares or debentures to investors shall be construed as having been made to the public‚ meaning "public offering". According to the provisions‚ any offer of shares or debentures made to 50 persons or more will be considered a public offering‚ which will in turn require listing of the said shares or debentures on a recognised Stock Exchange
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procedures will not detect a misstatement that exist in an account balance or class of transactions that could be material‚ individually or when aggregated with misstatements in other balances or classes. For example‚ the use of a limited sampling for the selection of transactions. Auditors should increase the number of sampling to reduce the detection risk. INHERENT RISK Inherent risk is the susceptibility of an account balance or class of transactions to material misstatement‚ individually or when
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known and likely misstatements for the current year to evaluate whether there is a sufficiently low risk of material misstatement of the financial statements to issue an opinion. However‚ Kealey notes that there are several misstatements that have been carried over from prior years. A .Distinguish between the iron curtain and the rollover approaches to considering the misstatements from prior years. In consideration of an auditor’s approach for considering the effects of misstatements from prior years
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