Apollo Shoes Audit Plan Memo

In: Business and Management

Submitted By mikewu
Words 610
Pages 3
TO: Darlene Wardlaw
FROM: Team 2 section 2
DATE: 1/31/2016
SUBJECT: (GA-5) Materiality for Apollo Shoes

From analyzing the data from the financial statement of Apollo Shoes.Inc, I had found many points that was found to be skeptical of containing material misstatement of a company’s assertions.
1. Independent auditors’ concept of materiality
As an independent auditor, our goal is to obtain the reasonable assurance about whether the financial statements as a whole are free of material misstatement. In consideration of the usage of the outside user of a company’s information, material misstatement may influence the user’s point of view while making decisions. In addition, materiality is a matter of professional judgement that the engagement partner must decide in each audit engagement. At the same time, most importantly, in an audit of financial statements, the auditor's judgment as to matters that are material to users of financial statements is based on consideration of the needs of users as a group.
2. Common measure of materiality
Financial statement measurements and information in some footnote disclosers are not usually presented in the most accurate amounts. So, choosing an appropriate benchmark such as total net assets, profits before tax, total revenue can relate directly back to the financial statement. In addition, looking at the calculation of those key number amounts’ percentages, ratios, levels of rounding to zero could detect abnormalities or materiality when compare to the benchmarks such as industry standards, company history performances.

Benchmark( 2014) threshold Qualitative analysis Quantitative analysis
Total asset 0.3% of total Asset-
0.4 Million Related to Net sale and then to Net profits, total asset increase due to mainly increase in short term assets such as Account Receivable and cash and partially dose to long term…...

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