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ma’am I wanted to understand how is it deterred if a matter is material by nature or not?
eg. I thought the cyber attack was material by nature, so disclosures are required. if no disclosure then finical statements will be materially misstated.
since this point is not there in examiner’s answer, am not sure after all it is material by nature.
also ma’am I wanted to understand is there any approximate figure with regard to % loss revenue which could indicate that there are concerns with regards to a company’s going concern?
for eg. I thought that since pioneer cruise contributes 35% of revenue of group, so it is material to group. Withdrawal of its licenses by government could mean that there is a threat to going concern status of pioneer cruises and thus such material uncertainty related to going concern needs to be disclosed in group financial statements. so there is an audit risk of inaccurate/incomplete disclosure in group financial statements…
now I understand you cannot mark it, but I just wanted to get an understanding of this concept, due to lack of any benchmark it becomes very judgmental to decide if a certain % of loss revenue is a material uncertainty to GC.
Any help would be much appreciated.
Something that requires disclosure e.g. directors’ emoluments is material “by nature” – i.e. it must be disclosed regardless of monetary materiality.
I don’t have the question but if the cyberattack is an event after the reporting date, then it should be the criteria for reporting a non-adjusting event that determines whether it is required to be disclosed. I suggest that unless it will have a material effect on the financial statements in the following year, it will not merit the attention of the readers of the financial statements (and therefore would not be disclosed).
But you don’t just lose 35% of revenue when you close a division/sell a subsidiary (or whatever) – you also “lose” (i.e. save!) the related costs, etc. The impact on GP/OP is not the same amount a 35% of revenue. Indeed – to “lose” 35% of revenue by divesting a loss-making subsidiary could be a “good thing”.
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