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material misstatement

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA AAA Exams › material misstatement

  • This topic has 1 reply, 2 voices, and was last updated 7 years ago by MikeLittle.
Viewing 2 posts - 1 through 2 (of 2 total)
  • Author
    Posts
  • February 13, 2018 at 11:43 am #436776
    anikedisu
    Member
    • Topics: 8
    • Replies: 5
    • ☆

    Hey Mike,

    I have been reading a few questions on materiality and i am so confused on what to consider as material for PBT normally 5% to 10% is not material in some of the questions have have studied. However, a question i just completed claimed that a materiality of 5.6% was material.

    Could you please enlighten me on what % you would consider material in terms of total assets, PBT and total revenue.

    Thank you so much
    Kind Regards
    Anike

    February 13, 2018 at 12:27 pm #436816
    MikeLittle
    Keymaster
    • Topics: 27
    • Replies: 23315
    • ☆☆☆☆☆

    For quantitative measurement, traditional benchmarks are:

    ½ – 1% of turnover
    5 – 10% of profit before tax
    1 – 2% of gross assets

    I find it difficult to believe that something that lies between 5% and 10% is considered immaterial in some answers that you have read – I would love you to give me the exam reference where such items have been treated as immaterial so that I can read it for myself!

    OK?

    For qualitative matters, the monetary value of the item under consideration is irrelevant

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  • The topic ‘material misstatement’ is closed to new replies.

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