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rashard wrote:Guys, I got a question related to materiality in part A. Preliminary materiality was set at 25k. And also there was a misstatement of 12k which was uncorrected. The question asked was to select two correct statements in relation to a misstatement of 15k.
I can remember I picked<br> 1. This misstatement is not material therefore adjustment is not required<br> 2. Opinion will not be modifieduhm i think we had to pick only one option there and i ticked it as material because we already had 12k uncorrected and extra 13k would make it 25k the max limit. it would be material.
nyashadzashe5 wrote:My exam had audit assignments,substantive procedures for revaluation ,inventory ,provisions and sales tax liability …….also ask about the definition of materiality and performance materiality …..anyone who wrote that exam ????
@Rashard – this is primarily your student forum – any questions for my attention will need to be asked on the Ask AA Tutor Forum
@sirhanj We had to select two options as far as I remember. If anyone can remember all four options please comment
Hi @sirhanj,
What I feel is- about this question. Since i got the same question in exam.
There were two amounts you are right. But then we were testing them individually and comparing with the set limit which is 25000. I guess. So 13000 was different and 12000 was different . And these were two different balances to be tested and compared with the set materiality. So since 12000 is less than the 25000,hence not material.Total 24 Questions: 15 were MCQs rest are as below:
1) Required to calculate any 5 ratios from two year data (5 Marks)
2) Credibility of work of Expert. (4 Marks)
3) Substantive Procedures over damaged inventory anf Fixed Assets due to Fire (6 Marks)
4) Substantive Procedure over provision for Insurance claim (5 Marks)
5) Audit Risks from typical scenario (16 Marks)
6) Identify and explain existing controls and respective TOCs (14 Marks)
7) How understanding can be obtained from Board Minutes, Company Website e.t.c (5 Marks)
8) Explain and give Advantages of Narrative Notes, Flowcharts and Questioners (6 Marks)
9) Procedures to Ascertain Going concern of company in scenario? (5 Marks)Some MCQs included:
Non executive Directors, Analytical process with regard to Increase in Online sales, Irrecoverable debt recorded as recoverable impact on audit report and written representation, OECD Corporate governance include what, unable to physically verify asset pervasive or qualified. e.t.c.
@nabaya but we had to tick only one i guess? by one i mean option we had to tick 1 option?
@sirhanj, yes correct but then what was required to be ticked was relating to the 15000 amount so this was not material according to me because 12000 was a separate balance and this was a separate balance.Thus they were two different balances, we cannot combine both of them together and check materiality. Since 25000 was not financial statement level materiality.
@nabya do u know performance materiality? it means we keep our materiality lower than usual if aggregated to a higher level of material mistatements here they didnt say the 13000 is isolated so it means they can be added up and be material to the financial statements.
if not read about performance materiality try having a read please.@nabya
i asked sir
https://opentuition.com/topic/materiality-42/#post-598548
have a look and correct me if wrong@sirhanj are you sure about only having to pick 1 option? As far as I remember we had to pick 2?
@ranganaherath we had to pick 1 option because audit report can have only 1 opinion there were 4 different opinion how come 2 can be selected?
@areafada7
As far as I know, the written representation is not a reliable evidence (alone). Written representation supports other evidence.
The most reliable evidence is an evidence:
obtained directly by the auditor, e.g. circularisation;
obtained from the external source, e.g. bank confirmation letter;
original rather than copies;
written rather than oral.Client generated evidence is the least reliable.
zeeshanqureshi wrote:Total 24 Questions: 15 were MCQs rest are as below:
Do you mind me asking what you answered to the questions about damaged to fixed assets and the provision for inventory as I had those questions also.
Did anybody else have a lag with the remote proctored exams? Like when you were typing and there was a lag with what the screen was showing? For my exam, I would finish typing and the screen would still show I’m typing when I’m done. The worst part was the timer kept reducing but the software was delaying my typing and hence delaying me from completing the paper on time.
🙁 🙁 Did anyone else face this?I also got 1.95m
I wasn’t sure if the 5th warehouse was already making sales they didn’t specify that so I didn’t do the formula to get to 2.25m
I also think a lot of students would have just taken 1.8m and added 25% = 2.25m
The trick was to separate the revenue to online sales and only increase 25% on online sales
1.8 x 1/3 = 0.6 + 25% = 0.75
1.8 x 2/3 = 1.2
0.75 + 1.2 = 1.95mYeah you’re right simply multiplying 1.8*1.25 = 2.25M and would’ve been straight forward. But the explanation @rashard gave regarding the fifth warehouse was generating the sales same as the others is something to think about too and honestly kudos to him. Due to the exam pressure that didn’t even cross my mind so I went ahead with 1.95M
Had I gone with the simple math as mentioned above I would’ve got the answer too? 🙂
@francojooste what other MCQs did you get as far as you remember?
Was the 5th warehouse already generating the sales or was expecting to generate the sales as per the question cause then the context changes
I think it said the warehouse was bought/started trading at the beginning of the FY and was expecting to have the same level of trade as the other 4 sites. I got $2.25m multiplying the 2 bits by 1.25 separately and kept wondering if it was too simple! Felt wrong that both parts would need to be multiplied by the same number?
@zeeshanqureshi, I got this exact question paper set. Are you missing out on 1 question? Because This is a total of 66 marks. So 1 more question of 4 marks? I can’t seem to recall!
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