...Accounting 732 Audit II 9/25/2012 Anne Aylor Inc. A. Why are different materiality bases considered when determining planning materiality? Different materiality bases are considered when determining planning materiality because the magnitude and nature of financial statement misstatements or omissions have different influences on different financial statement users. For example, investors are more interested in the accuracy of numbers involving net income because they are mainly concerned with the company’s ability to increase shareholder wealth. For an audit company, the primary concern when planning materiality is to take into account all expected financial statement users. These different expected users all have different concerns in regards to where financial statements contain misstatements. Debtors such as banks who provide loans to help companies like Anne Aylor raise capital are mainly concerned with company’s maintaining debt covenants involving current assets. Anne Aylor has a debt covenant to maintain a current ratio over 2.0, which according to the company’s projected 2012 balance sheet, will not be met. These debtors are more concerned with Anne Aylor overstating assets or understating liabilities in order to meet these debt covenants and avoid potential interest rate changes. B. Why are different materiality thresholds relevant for different audit engagements? Different materiality thresholds are relevant for each audit engagement because...
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...Anne Aylor Case [a] Why are different materiality bases considered when determining planning materiality? Financial information have a lot of different areas and its now equally important for its users. In the case of auditor, based the preliminary procedures performed and the nature of the entity, only some areas that he would need to be focus on. [b] Why are different materiality thresholds relevant for different audit engagements? Materiality is not an absolute concept but rather based on professional judgment. Therefore the materiality threshold will vary depend on the situation of the entities and different important audit areas of entities. [c] Why is the materiality base that results in the smallest threshold generally used for planning purposes? In order to give a reasonable assurance for the financial statements are free of material misstatement, the auditor have to design the audit using the smallest threshold to detect the smallest misstatement possible. [d] Why is the risk of management fraud considered when determining tolerable misstatement? If management is intentionally trying to misstate the financial statements it is likely that misstatements will be systematically biased in one direction. On the other hand, if management is not trying to misstate the financial statements it is likely...
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...How to improve and maintain the independence of external auditors Auditor's responsibility is to give advice based on the company's annual financial statements. A company will work with the auditor's annual report of the decision. So this is an important auditor to provide accurate reports. (Dr Jill, Professor Robin)[online] An independent auditor to give the opinion that is no other factors. It includes human, economic, monetary, and so on. Their view is that there is no limit, and give them the freedom to express their views based on their expertise. Besides, they must be clear and to ensure no errors in the opinion. As they say is a company in important business decisions. Although this is the advice given by person, but as a professional auditor should reduce accidents. Professional auditor must be independent of its work. When problems occur, they must be the cooling time and the time taken to solve the problem, without any confusion. An independent auditor must be a smart, intelligent person. Because they know how to handle and solve their own problems without people help. Code of ethics Code of ethics is formed to help the auditors aware to the areas where ethical pressure may exist and be in dependent all the time. Independent auditors are not only responsible to their client but also the public interest. Therefore, they should follow the code of ethics. (Sagar, Mead, Bampton, 2008) There are some fundamental principles in code of ethics which must followed by them...
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...Case 2 [1] A. Financial information is prepared for multiple users for different purposes and thus not all elements of the financial statements are equally relevant to all users. B. Materiality is a relative rather than an absolute concept. The materiality threshold that will influence users of the financial statements will vary depending on the context in which the entity operates. C. Auditors must design the audit to find the smallest misstatement that would influence users of the financial statements. Reasonable assurance that the financial statements are free of material misstatements cannot be provided unless the audit is designed to detect the smallest misstatement that would influence users. D. A high likelihood of management fraud makes it more likely that individual account misstatements will have the same directional effect on net income (i.e., asset accounts will be overstated and liability accounts will be understated). On the other hand, a low likelihood of management fraud makes it more likely that individual account misstatements will have an offsetting effect on net income e. The nature and cost of evidence available by account varies. Therefore, to minimize cost, auditors may want to assign a higher tolerable misstatement to accounts lacking competent evidence or costly to audit. The higher the tolerable misstatement for an account the less evidence needed. F. It is not likely that all account misstatements will have the same directional...
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...[1] a) Looking at Exhibit 1 it says that “the magnitude and nature of financial statement misstatements or omissions will not have the same influence on all financial statement users” (p.11). With that it is clear why different materiality bases are considered because a misstatement on one account on the financial statement may be of more importance to one particular type of user while or the other it is irrelevant. b) An example given at the bottom of Exhibit 1 explains why it is important to have different thresholds for different audit engagements. “If a client is close to violating the minimum current ratio requirement for a loan agreement, a smaller planning materiality amount should be used for current assets and liabilities. Conversely, if the client is substantially above the minimum current ratio requirement for a loan agreement, it would be reasonable to use a higher planning materiality amount for current assets and current liabilities” (p.11). This makes sense because it is unfair to audit a small company under the same materiality thresholds as one would do with a significantly large company. c) Once again looking at Exhibit 1 on page 11, the very last paragraph on that page states why it is important to generally use the smallest threshold for planning purposes. It is because the smallest amount provides reasonable assurance that the financial statements, takes as a whole, are not materially misstated for any user. It is to be conservative with discrepancies...
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...ACG 4010 Module 5 Project Assignment The three jobs that I chose in my business choice are: 1. An order for a custom dining room table 2. An order from a distributor for 20 modular living room sets,(couch, loveseat, chair) 3. An order for a modular wrap around couch and custom coffee table. Job 1 the custom dining room table will need to have the cost figured using the Job Costing System. I will use the 7 steps in order to determine the cost allocations for the job. I will then complete a Job Cost Sheet. I will breakdown the materials needed, the price for the salary of the designer, the labor and the overhead. After that I can then determine how much the job will cost and in turn the amount to charge the customer in order to make a profit. Job 2 is purely s manufacturing job. I will use the process costing system. The 7 step from the order to identifying costs, selecting an allocation base, establishing indirect costs, computing the rate based on prior jobs completed, computing the indirect costs and then computing the total costs so that I can determine the cost to the customer. Job 3 is a combination job which I will use both the Job Costing System and the Process Costing System because part of the job is manufacturing like items and part of the job is designing a custom coffee table then manufacturing multiple units of that table. Again I will use the seven step process in order to determine the cost per unit and what to charge the customer in order to make...
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...7 Planning Materiality C a s es inc lu de d in t his Se ction 7.1 Anne Aylor, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 229 Determination of Planning Materiality and Tolerable Misstatement O t he r c ase s t h at discuss topics rel ated to this section 5.6 Sarbox Scooter, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . 185 Scoping and Evaluation Judgments in the Audit of Internal Control over Financial Reporting 12.1 EyeMax Corporation . . . Evaluation of Audit Differences . . . . . . . . . . . . . . . . . . . . . . . 369 12.2 Auto Parts, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 379 Considering Materiality When Evaluating Accounting Policies and Footnote Disclosures Instructor Resource Manual — Do Not Copy or Redistribute Instructor Resource Manual — Do Not Copy or Redistribute Anne Aylor, Inc. C a s e 7.1 Determination of Planning Materiality and Tolerable Misstatement Mark S. Beasley · Frank A. Buckless · Steven M. Glover · Douglas F. Prawitt Ins tr uc t ional O b je c t ive s [1] To provide experience with establishing planning materiality. [2] To provide experience with establishing tolerable misstatement for individual financial statement accounts. [3] To illustrate factors considered when establishing planning materiality...
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...Whether Aereo’s Transmissions to Individual Subscribers is “Public”? Strategic Issues and Problems According to the case, Hearst is appealing that its competitor Aereo poses a threat to over-the-air broadcast services by using contrived technology to free-ride on WCVB’s substantial investment in its copyrighted programming. At the first of glance, the argument appears to be somewhat convincing, but further reflection reveals that Hearst’s appealing is not consolidating as it stands. There is no solid evidence that can proof the current strategy of Aereo using is unlawfully distributing its signal. Evaluation and Analysis The essence of the conflict between Aereo and Hearst is whether Aereo infringes copyright by publicly performing television shows without a license. Hearst sued that Aereo retransmits performances of copyrighted programs to members of the public through internet and mobile device streaming which infringes Hearst’s copyrighted programming. Consequently, Hearst will be deprived of existing and potential revenue streams from advertising and authorized retransmissions. On the other hand, Aereo argued that its streams are not “public” performance, because Aereo captures the content from the airwaves through thousands of tiny antennas in local warehouse. In addition, Aereo doesn’t transmit anything but it is instead their subscribers who are doing it. Therefore the transmissions are not public performances and so do not infringe Hearst’s copyrights. Alternatives ...
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...Ana Bolena – Anne Boleyn 1501(1507)-1536 Queen of England 1533-1536 Mother of Elizabeth I Information about the early years of Anne Boleyn is almost non-existence; her birth has been dated from 1501 to 1507. Although information about her parents is abundant. Her father, Sir Thomas Boleyn, was named Sir in 1503. He was fluent with the languages, which allowed him to travel through Europe under the King’s orders and be part of important meetings. He was one of the bodyguards that took the Archduchess Margaret to Scotland, and he participated in various meetings with Charles V. Her mother, Isabel Howard, came from a family of Dukes, although the title had been taken away in 1485, it was given back in 1514. At age 12, Anne was sent to the court of the Archduchess Margaret to be a fille d’honneur. Here she learned French and how to be part of the court. The Archduchess wrote a letter to Sir Thomas telling him what a wonderful daughter he had, and how graceful she was of having her in her court. In 1514, Anne went to France to be part of the court of the Queen Mary, the sister of the King of England. But Queen Mary soon returned to England and Anne stayed in France being part of the new Queen’s Court (Queen Claudia). In France she was educated as a French girl, she learned and love their poetry, music, clothes; she was considered one of them. In 1521 Anne returned to England, because she was getting married. While her marriage was arranged, she became part of Queen...
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...Wolsey was a great servant to Henry VIII in government from 1514-1529, becoming one of the highest powers in the country. As he was given the title of Lord Chancellor, it meant his power was at probably its greatest point. Henry was said to be a very lazy monarch, and therefore Wolsey would have a significant amount of duties to run the monarchy. Wolsey changed areas of government such as the justice system and revised areas such as finances and parliament structure. His relationship with the King was significant, as he would be the higher power and would need to negotiate with the King and yet still get the correct decision. Wolsey managed his relationship with henry well, he tried to get the right outcome for the country but never forced it upon Henry, not damaging their relationship and keeping Wolsey in power. Wolsey had a poor approach with justice; in court he gained a poor reputation for taking bribes and his relationship with England’s nobility was poor to say the least. The financial approach was a tough period in finance; with a King that wanted to spend and go to war, and Wolsey had no choice but to bow to his majesty’s request. Wolsey was to follow on the financial policy of an extremely successful monarch with finances, in Henry VII. Wolsey’s balance sheet was a mixture of successes and failures; his aim was to manage the finances so that King’s policies were still affordable. He found a good source of income to raise funds for the French war. This was the largest...
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...Espinoza, Anita Stanford Searle English 102 Spring 2014 June 1, 2014 Paper 5 The Confessional Poet, Sylva Plath Sylva Plath was a pioneer who never got to see the results of her writings. She led a tormented life which was reflected in all her poems. She lost her father at age eight and never recovered from it. From the first to last of her published writings, Sylvia Plath what was later to be named as a confessional poet. This term did not exist while she was alive. Although she died at an early age, she has contributed much to the literary world. She had many confessional themes in her pieces. The main theme was resentment. The reading audience of her time was not a great change in which we looked at literature in a different light. No longer did it have to be fluff but literature could take a stance on current events or personal tragedies. People began to relate on a more intimate level. This sparked a new interest in literature. We will see how the term confessional poet relates to Sylvia Plath and how it applies to her poetry. A confessional poet by definition is a poet whose work lies in their own personal experiences. Sylvia used her life experiences to no so much relay her resentments about many of the injustices she felt in her life. She did not lay blame just expressed her emotions and opinions about certain times in her life. During the 1960’s, she was the first to do this and was not widely received at first. It was not until after her death that she was recognized...
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...The women writers from Norton Anthology remind me of a great deal about the women in today’s society. Women today and from the past had to face the same hardships. They had to rise up from their invisible constraints just to gain their equality. Women always had to fight to gain their gender liberation. I would like to compare my mom to Queen Elizabeth. My mom always reminded me of a military mom. She was very strict in her ways, even when it came to the dinner table. I remember she told me I could not have juice until I finished eating all my food. Even to this day I eat mostly all of my food, before I drink any kind of liquids. I tell people do not blame me, blame my mom. She made sure that she would not baby me in any way. My mom made sure to raise a man. When she saw me being picked on one day she made sure I would fight them no matter how big they are. She always told me life was hard. There will always be challenges in your life, but you do not run away from them. I guess she was talking from personal experience about when she found out she was pregnant. She did not run or hide from the fact she was having a child. She embraced it and acknowledged the fact that she was basically going to be a single mother. My father was always in and out of jail, so she knew she could not depend on him. In the same way I am like my mom. We are both realists. I hate when someone say they are going to do something, and they do not do it. My mom told me that...
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...Queen Elizabeth is a leader that possesses many great qualities. She had a vision that earned her people’s love through respect, understanding and being unprejudiced. As a leader, she accepted the opinions of her advisors but at the same time thinks rationally and decides on what is the right thing to do for her people and country. In the beginning, Queen Elizabeth and her ministers were discussing how Mary Stuart, a devoted Catholic, is the Queen of England in waiting. Her ministers advised her that all Catholics are traitors and their loyalty is to the Pope of Rome. It was right for Queen Elizabeth to say that she will not punish her people for their belief but only for their crimes. This showed that she understands that by allowing people to live freely, it creates joy and happiness among the people. This in return will allow her to earn the love from her people. She is able to show that she wants to maintain a good relation with her loyal Protestant supporters and her ministers; she made decisions for the good of her people and country even though some might not agree with her decisions. From this situation, it is clear that the she was able to adopt fairness and transparency. She was able to make practical decisions about issues, and treated everyone equally (Brimacombe 2000). During one of the greatest wars known in history – the English defeat of the Spanish Armada. Queen Elizabeth truly stands out as an organized, brave, honest yet motivating leader. Queen...
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...September 30, 2010 Brad Smith General Counsel Legal and Corporate Affairs Microsoft 21925 SE 51st Pl Issaquah, WA 98029-8328 Subject: Permission to Use Microsoft Copyrighted Content Dear Mr. Smith: We are contacting Microsoft because we are requesting permission for the right to use screen shots of your Office software application in the Slatco Office Thermal Binder Quick Start Guide User Manual. Slatco is in the business of manufacturing thermal binders. The user manual for our latest binder, the TB 660 Office Thermal Binder, is currently being written. We respectfully request your support as the copyright holder of the Office software application to allow us the right to use screen shots free of charge in our Quick Start Guide. We assure you that the full name of your product and the statement, “Used with permission from Microsoft,” will accompany each screen shot. In addition, in accordance with the requirements of Microsoft: * We will not alter any screen shot except to resize it. * We will not use portions of screen shots. * We will not include screen shots in our product user interface. * We will not use screen shots that contain third-party content. * We will not use screen shots that contain an image of an identifiable individual. We would appreciate your response by November 20. The manual is scheduled for completion no later than February 20. Would you please indicate your permission below and return...
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...The Claims of Elaine E. Whitaker Whitaker makes several interesting claims about the characters in Why I Live at the P.O. The three claims I found most insightful were that “Throughout the narrative, Sister views her own efforts as undervalued”(115), “Like her furnishings, Sister appears incomplete” (Whitaker 115), and “ Why I Live at the P.O. also bottles up knowledge itself through its deliberate repression by various characters” (115). Each of these claims allows the reader to contemplate different aspects of the story so they can gain a better understanding of the characters. I will examine theses three claims and try to find evidence in the story to support or disprove them. When reading Why I Live at the P.O. it is easy to see why Whitaker would make the claim that “Throughout the narrative, Sister views her own efforts as undervalued” (115) From the very start of the story sister expresses a sense of feeling unappreciated with her comment “There I was over the hot stove, trying to stretch two chickens over five people and a completely unexpected child into the bargain without one moment’s notice” (Welty 415). This comment shows that Sister believes no body cared enough about the effort she puts into making dinner for the family to inform her that there would be more people to feed. As the family sits down to eat the dinner Sister has prepared no one thanks her or even acknowledges the fact that she alone made dinner for everyone. Sister later tells how she was...
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