- This topic has 2 replies, 2 voices, and was last updated 8 years ago by .
Viewing 3 posts - 1 through 3 (of 3 total)
Viewing 3 posts - 1 through 3 (of 3 total)
- You must be logged in to reply to this topic.
OpenTuition recommends the new interactive BPP books for March 2025 exams.
Get your discount code >>
Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA AA Exams › Materiality
When calculating materiality, would it be essential to note whether the client is high risk or low risk in order to determine whether to use the lower range or higher range of a materiality benchmark? For e.g if high risk use 5% of profit but if low use 10%.
Also, if both revenue and profit before tax is given or if an extract of f/s are given which requires you to select the appropriate benchmark, what would determine which benchmark is most appropriate?
Yes. The preliminary calculation of materiality is telling the audit team where to note matters or take an interest in them.
If the client is considered high risk, then materiality would be set at lower (ie more sensitive) levels.
There is no east answer to you second question. Revenues can be huge but profits small. I think at F8 just go for the most sensitive – unless it is obviously silly.
Ok thank you.