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Hello,
The lower end of the materiality range has been selected because there is a need to minimise the risk that users' decisions are affected by an undetected material misstatement in the financial statements. We need to adopt a prudent approach.
Is this an appropriate justification and will I earn mark?
1h ago#1Welcome to my forum!
Short answer - I think no - it will not.
This is from the M/J26 examiner's report
"However, simply stating that ‘materiality has been set at a specific value due to the risks which have been identified’ or because the audit is ‘high risk’ is not considered a suitable explanation by the examining team and will not be awarded credit."
Yours is a similarly "generic" answer - there is always a need to "minimise risk" - you don't say WHY in the specific circumstances of this audit client.
Compare with what the examiner wants to credit (M/J26 Q1(b) answer):
"This is set at the lower end of the range because of the significant risks identified in relation to the classification of the new investment made in the year and the impact of the current trading conditions on the assets of the Group."
