MODULE 21

Question 1

What is reporting materiality?

Answer 1

The final overall materiality level calculated at the completion stage, using the finalised financial statement numbers

Question 2

What’s meant by a company going concern?

Answer 2

Going concern is an accounting term for a company that has the resources needed to continue operating indefinitely

Question 3

What are directors responsibilities in relation to going concern

Answer 3

1. Preparing the financial statements
2. Disclose any material unertanties, in relation to going concern if they exist
3. disclosing if the company hasn’t prepared the financial statements

Question 4

What are the Auditor responsibilities in relation to going concern

Answer 4

1. Obtaining sufficient appropriate evidence to conclude non whether the business is a going concern
2. Concluding on whether a material uncertainty exists

Question 5

What are written representation letters?

Answer 5

Letters by management that they’ve fulfilled their responsibilities for the preparation of the financial statements

It includes that Management acknowledge the responsibility for preparation of the financial statements

That they’ve followed the ISA representations