- This topic has 3 replies, 2 voices, and was last updated 1 year ago by
.
- Posts
Hi tutor,
May I please ask 2 questions.1. If management is planning to recognise share based payment expense when they vest, not during the vesting period as required by the IAS, which key assertion would be at risk? Will it be completeness or cut-off? Or something else?
2. Say auditor calculates preliminary overall materiality using Profit Before Tax benchmark as the client had good financial history so far. However, during the year one of the client’s main customer goes into liquidation affecting client’s profit significantly. In this case, which benchmark would be appropriate? I don’t think revenue would be a good alternative so I thought Total Asset? But I could be wrong…
I am just doing bunch of questions here and there and wasn’t feeling too confident about these two.
Thank you!
MWelcome to my forum!
1. Yes it would be completeness – but note that this is NOT examinable in AA – only the FA exam docs are assumed knowledge for AA.
2. It is true that % PBT is unlikely to be suitable if PBT is small/approaching breakeven/a loss situation. The potential overstatement of trade receivables would mostly likely be assessed againt against total assets. However, this seems more like AAA to me than AA.
Hi tutor,
Thank you for your reply. In such case where PBT is not an ideal benchmark based on the given scenario, what benchmark would be more suitable?
Thank you
- You must be logged in to reply to this topic.