{"id":7232,"date":"2020-11-16T11:26:46","date_gmt":"2020-11-16T11:26:46","guid":{"rendered":"http:\/\/onlineclassesguru.com\/?p=7232"},"modified":"2020-11-16T11:26:46","modified_gmt":"2020-11-16T11:26:46","slug":"a-misstatement-of-a-given-size-might-be-material-for-a-small-company","status":"publish","type":"post","link":"https:\/\/onlineclassesguru.com\/index.php\/2020\/11\/16\/a-misstatement-of-a-given-size-might-be-material-for-a-small-company\/","title":{"rendered":"A misstatement of a given size might be material for a small company"},"content":{"rendered":"<style type=\"text\/css\"><\/style><p>Respond 1:<br \/>\nA misstatement of a given size might be material for a small company, whereas the same dollar misstatement could be immaterial for a larger one.<br \/>\n-Bases are needed for evaluating materiality<br \/>\nNet income before taxes is normally the most commonly used base, but other possible bases include current assets, total assets, current liabilities, and owners\u2019 equity.<br \/>\n-Qualitative factors also affect materiality<br \/>\nCertain types of misstatements are likely to be more important to users than others, even if the dollar amounts are the same<br \/>\nBecause Auditors determine if there is a misstatement\u00a0and the level of material in\u00a0it, I think it\u2019s best\u00a0to develop an audit plan\u00a0of action.\u00a0 According\u00a0to PCAOB, \u201cThe effect of the misstatement on segment information, for example, the significance of the matter to a particular segment important to the future profitability of the company, the pervasiveness of the matter on the segment information, and the impact of the matter on trends in segment information, all in relation to the financial statements taken as a whole.\u201d\u00a0\u00a0https:\/\/pcaobus.org\/Standards\/Archived\/PreReorgStandards\/Pages\/Auditing_Standard_14_Appendix_B.aspx<\/p>\n<p>Respond 2:<\/p>\n<p>The three main factors that affect an auditors judgment about materiality includes materiality is a relative rather than an absolute concept. Bases are needed for evaluation. It is necessary to have bases for establishing whether misstatements are material. Qualitative factors also play a factor, especially misstatements that involve frauds. Misstatements that are otherwise minor may be material if there are possible consequences arising from contractual obligations.<br \/>\nAudit risk is the risk that the auditor will express an inappropriate audit opinion on financial statements that contain material misstatements. Limited segregation of duties. No single person should be responsible for the authorization of transactions, recording of transactions, and custody of the impacted assets of transactions. The opportunity for errors or fraud is higher than in larger corporations where incompatible functions are often handled by different people. Smaller organizations need to implement compensating controls to help ensure the objectives are met, such as oversight, supervision, and monitoring by management or those charged with governance.<\/p>\n<p><center><a href=\"http:\/\/onlineclassesguru.com\/orders\/ordernow\"><img decoding=\"async\" src=\"https:\/\/encrypted-tbn0.gstatic.com\/images?q=tbn:ANd9GcTyj99p60XCLyLk1htB7-1neRt8-2QdnenNlQ&usqp=CAU\"target=\"_http:\/\/onlineclassesguru.com\/orders\/ordernow\"\/><\/center><p>","protected":false},"excerpt":{"rendered":"<p>Respond 1: A misstatement of a given size might be material for a small company, whereas the same dollar misstatement could be immaterial for a larger one. -Bases are needed for evaluating materiality Net income before taxes is normally the most commonly used base, but other possible bases include current assets, total assets, current liabilities,&#8230;<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[],"class_list":["post-7232","post","type-post","status-publish","format-standard","hentry","category-uncategorized"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v17.0 - 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