Hi Sir,
In the question Gruber (Kaplan question 1) how did we fix the range of materiality by using 5% on PBT and by taking 10% on operating profit? It has be either based on PBT or based on Operating profit right?
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Materilaity - range
3y ago#1Welcome to my forum!
Gruber is a Q from S/D21 exam - I don't know how Kaplan has adapted this Q for professional skills marks (nor is it for me to justify).
If you look at the specimen 2022 exam you will see that materiality is now examined in a particular way for professional skills marks. The partner will tell you in exhibit 1 on what basis materiality is to be set. If it just says "profit" your answer does not have to be limited to consideration of PBT or operating profit (if given both) - you have the opportunity to exercise judgement here (and get a professional skills mark for it). There will then be a further professional skills mark for applying whatever materiality $ amount you come up with consistently.
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