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Materiality Calculation

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA AAA Exams › Materiality Calculation

  • This topic has 3 replies, 2 voices, and was last updated 5 years ago by Kim Smith.
Viewing 4 posts - 1 through 4 (of 4 total)
  • Author
    Posts
  • August 12, 2019 at 7:31 am #527185
    foeldh123
    Participant
    • Topics: 168
    • Replies: 76
    • ☆☆☆

    Hi,

    We are required to show materiality calculation for Question 1 (Audit risk) and Question 2 or 3 (when question asks to comment on the matters)

    But for question 1, just calculating 1 relevant materiality will be sufficient (among revenue, total assets and profit before tax)

    However for question 2 or 3, we are required to calculate all relevant calculation unlike question 1 ?

    Because in March June 2019 paper, for question 3(b), examiner showed 2 calculations for (i) and (ii) in the marking scheme. So i was wondering if we can show just 1 materialty calculation for Question 2 or 3 as well

    August 12, 2019 at 8:14 am #527193
    Kim Smith
    Keymaster
    • Topics: 132
    • Replies: 8266
    • ☆☆☆☆☆

    I don’t know what you mean – in Q3(b) there were 3 accounting treatments and for each there is a calculation of materiality which is relevant to the evaluation of the accounting treatment. (If a matter is not material the accounting treatment hardly matters.)

    August 12, 2019 at 12:20 pm #527200
    foeldh123
    Participant
    • Topics: 168
    • Replies: 76
    • ☆☆☆

    Yes for Q3(b), 3 accounting treatments have calculation of materiality. However for Q1, if one of the audit risk is overstatement of revenue, do we need to calculate revenue and profit before taxation ? or just one either revenue or profit before taxation ?

    Because during exam, i’m worried because i won’t have much time to calculate so i would like to know whether we are required to calculate just 1 materiality calculation or all relevant materiality calculatin to score 1 mark as per marking scheme

    August 12, 2019 at 2:31 pm #527209
    Kim Smith
    Keymaster
    • Topics: 132
    • Replies: 8266
    • ☆☆☆☆☆

    Please see here my posts about making only RELEVANT calculations of materiality https://opentuition.com/topic/march-june-2016-boston/

    Just one relevant calculation is all that is needed.

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