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AA Question Rote > Materialty % AND Auditor's Report Section B > Flashcards

Materialty % AND Auditor's Report Section B Flashcards

1
Q

When is profit after tax considered material?

A

If it is over 10%

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2
Q

Is 8% profit before tax material?

A

Yes

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3
Q

Test for completeness (understatement) direction?

A

Source document => FSs

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4
Q

When does interim audit occur?

A

During the period of review

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5
Q

When does final audit occur?

A

After the year end

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6
Q

Purpose of interim audit?

A

Carry out procedures that would be too difficult to perform at year-end due to time constraints

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7
Q

Statutory requirement for interim or final?

A

Interim: No statutory requirement to perform interim audit

Final: Statutory requirement

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8
Q

Purpose of final audit?

A

Express an audit opinion on FSs covering the entire period being audited

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9
Q

How should possibility of additional claims be disclosed?

A

As a contingent liability, as it is possible but not probable and quantifiable

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10
Q

If adequate disclosure of provision?

A

Unmodified opinion with emphasis of matter paragraph

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11
Q

If inadequate disclosure of provision? (material but not pervasive_

A

Qualified with a basis for qualified opinion paragraph

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12
Q

Is 7.3% profit before tax material?

A

Yes

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13
Q

When provisions are understated and error is material but not pervasive (auditor’s opinion)

A

A qualified opinion would be necessary

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14
Q

When is a basis for qualified opinion paragraph needed?

A

Explains the material misstatement in relation to EVENT and the effect on FSs

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15
Q

How should possibility of additional claims be disclosed in IAS 37?

A

As a contingent liability

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16
Q

When company adequately discloses an issue?

A

Unmodified with emphasis of matter paragraph

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17
Q

When company inadequately discloses an issue? (likely material but not pervasive)

A

Qualfiied opinion with basis for qualified opinion paragraph

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18
Q

What does a basis for qualified opinion paragraph used for?

A

Discusses the matter and opinion paragraph will be modified to state “except for” the failure to adequately disclose the matter

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19
Q

Is 2.3% of total equity+liabilities/total assets considered material?

A

Yes

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20
Q

What if a FD refuses to amend this error IAS 37?

A

Audit opinion will be modified due to a material misstatement

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21
Q

Is 2.1% of total assets considered material?

A

Yes

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22
Q

What would IAS 10 classify as an adjusting event?

A

If conditions of an event existed at year-end

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23
Q

What happens if there is a faulure to make such a provision? (effect on profit and provisions)

A

Causes profits to be overstated and provisions to be understated

24
Q

Impact on audit opinion if directors refuse to make a provision?

A

Should issue a modified opinion on the grounds that there is a material misstatement

25
Q

What is the opinion paragraph called for a material but not pervasive error with a basis for opinion paragraph included after the opinion paragraph?

A

Qualified “except for”

26
Q

An event which does not provide evidence of a condition at year-end? (adjusting or non-adjusting)

A

Non-adjusting event

27
Q

If disclosures arer adequate for a going concern issue?

A

A material uncertainty related to going concern section will be included

28
Q

What is the a material uncertainty related to going concern section included after?

A

After the opinion AND basis for opinion paragraph

29
Q

If disclosures are inadequate for a going concern issue (but there’s ongoing nature of negotiations)?

A

Qualified opinion

30
Q

What is a basis for opinion paragraph used for?

A

Explaning that a material uncertainty exists and that FSs don’t adequately disclose the matter

31
Q

Is 1.2% of total assets considered material?

A

Yes

32
Q

Can costs already expensed be written back as assets?

A

NO

33
Q

Where is the basis for opinion paragraph after?

A

The opinion paragraph

34
Q

What sort of opinion is formed if provisions are understated and profits are overstated?

A

Material but not pervasive

35
Q

6% of total liabilities material?

A

Material

36
Q

Audit opinion if management refuses to post-year-end payment run?

A

Modified

37
Q

Audit opinion if management refuses to remove project from intangible assets and charge it to SPL?

A

Is modified but not complied with IAS 38

38
Q

Audit opinion if there is a lack of signed written representation letter?

A

Auditor does not have sufficient and appropriate audit evidence to form an opinion

39
Q

Opniion given if there is no written representation letter?

A

Does not express an opinion on FSs due to inability to obtain sufficient appropriate evidence

40
Q

How does basis for opinion paragraph change if there is a disclaimer of opinion?

A

Changes to a basis for disclaimer of opinion

41
Q

How does statement that “auditor has audited the FSs changed” change in a disclaimer of opinion?

A

Will be changed to “auditor was engaged to perform an audit”

42
Q

When is a profit before tax erorr considered to be immaterial?

A

An error is less than 5%

43
Q

When is a review of subsequent events done?

A

Events which occur between date of FSs and date of auditor’s report

44
Q

When should audit misstatements be communicated to TWCG?

A

On a timely basis

45
Q

Materiality range for revenue?

A

0.5% to 1%

46
Q

Should 2.2% of profit before tax be adjusted?

A

NO

47
Q

Should 2.2% profit before tax be cause to modify an opinion?

A

Unmodified opinion with no further disclosure

48
Q

0.2% of revenue material?

A

NO

49
Q

Materiality level for assets?

A

1 to 2%

50
Q

Materiality level for revenue?

A

0.5 to 1%

51
Q

Materiality level for profit before tax?

A

5 to 10%

52
Q

8% profit before tax material?

A

Yes

53
Q

Confirms the proceeds of sale relates to which assertion?

A

Accuracy

54
Q

What is non-adjusting event?

A

Gives new information about event that did not exist at year-end

55
Q

Other matter paragraph represents?

A

Other matter paragraph only relevant to matters not related to FSs

56
Q

Emphasis of matter paragraph represents?

A

Only required if matter disclosed adequately in FSs and auditor considers to be fundamentally important and wishes to bring attention of user

AA Question Rote (30 decks)

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