Week 2 -1 Flashcards
1
Q
Overall materiality
A
Probably influences judgement of users
2
Q
Performance materiality
A
Reduce probability that aggregate of uncorrected and undetected misstatements exceeds materiality
3
Q
Clearly trivial
A
Clearly inconsequential, whether taken individually/ aggregate and whether judged by any criteria.
4
Q
Different materialities
A
Quantitative
Qualitative
–>
Examples:
Flip loss – profit
Debt covenants
Management compensation
Related party transactions
5
Q
Tolerable error affected by
A
o Cost of procedures
o Variability in the balance
6
Q
difference materiality accounting standard (IFRS) and GAAS
A
IFRS is based on management perspective and GAAS is focused on audit perspective
