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Materiality in Audit report

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA AAA Exams › Materiality in Audit report

  • This topic has 7 replies, 2 voices, and was last updated 8 years ago by MikeLittle.
Viewing 8 posts - 1 through 8 (of 8 total)
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  • August 7, 2016 at 11:16 am #331807
    jubaer1
    Member
    • Topics: 8
    • Replies: 4
    • ☆

    hello dear tutor
    previously we were not required to mention materiality in audit report question by ISA (ie appraisal).
    In the ACCA new article about report there is no indication about that.
    According to new standard do we need to say the materiality in Audit report appraisal question?? I saw some UK company auditor are showing materiality in the annual report (ie BP, Tesco).
    So what should we do??
    Thank you.

    August 7, 2016 at 1:35 pm #331822
    MikeLittle
    Keymaster
    • Topics: 27
    • Replies: 23315
    • ☆☆☆☆☆

    That’s a new one on me!

    Are you saying that the auditors are specifying their materiality levels to which they are working?

    Wow!

    August 8, 2016 at 10:27 am #332002
    jubaer1
    Member
    • Topics: 8
    • Replies: 4
    • ☆

    hi sir

    Yes sir. Can you ensure me about the matter?? whether to put the materiality level or not in the audit report and in the appraisal question have to mention or not? i can give you a snapshot of bp 2015 audit report but don’t know how to post here.
    thank you.

    August 8, 2016 at 2:33 pm #332046
    MikeLittle
    Keymaster
    • Topics: 27
    • Replies: 23315
    • ☆☆☆☆☆

    Well!!! That was an interesting read! I googled the BP financial statements and trawled through nearly 100 pages before I found the auditors’ report

    You’re correct (I never doubted you) and EY have detailed their materiality levels within their report

    It certainly makes the report clearer for the informed reader although I’m not sure what “Everyman’s” reaction will be to the statement …

    “We determined materiality for the group to be $0.5 billion (2014 $1 billion), which is 5.7% (2014 5%) of underlying replacement cost profit (as defined on page 258) before interest and taxation”

    To get back to your question, if there is a question asking you about audit reports, it’s highly improbable that you will be expected to write one out

    You MAY be expected to comment on a report written by the examiner in the exam

    It’s more likely that you will be asked about KAMs and the new format

    OK?

    For anyone who may be interested, here’s the link to BP audit report, page 96 and following:

    https://www.bp.com/content/dam/bp/pdf/investors/bp-annual-report-and-form-20f-2015.pdf

    August 8, 2016 at 10:11 pm #332118
    jubaer1
    Member
    • Topics: 8
    • Replies: 4
    • ☆

    hi sir

    firstly thank you sir

    i understand your explanation sir but i am not clear one thing about report appraisal question. in june 2014 Q5 there was a materiality issue and the examiner’s answer was there was, there is no requirement about materiality by ISA. That was previous std. But if same types of question came now how we should take approach?? (ie according to revised std we should show the materiality level or just like past answer no need?)
    thank you.

    August 8, 2016 at 10:16 pm #332121
    MikeLittle
    Keymaster
    • Topics: 27
    • Replies: 23315
    • ☆☆☆☆☆

    Like the past answer, no need.

    I can only imagine that EY have disclosed materiality in an effort to make the BP financial statements more understandable for the reader

    To that end, I find it laudable

    But I don’t see it anywhere in Standards just yet

    August 9, 2016 at 11:02 am #332184
    jubaer1
    Member
    • Topics: 8
    • Replies: 4
    • ☆

    thank you sir

    August 9, 2016 at 1:01 pm #332197
    MikeLittle
    Keymaster
    • Topics: 27
    • Replies: 23315
    • ☆☆☆☆☆

    You’re welcome (and it’s MIke, not Sir!)

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