ACC 521 Study Guide - Quiz Guide: Small Business, Shipping List, Sample Size Determination

• School: Ryerson University
• Department: Accounting
• Course: ACC 521
• Professor: Kathryn Bewley

Document Summary

Materiality is one of the first important judgments the auditor must make, since it affects every other planning, examination, and reporting decision. To leave room for error and reduce the probability that the total misstatement exceeds materiality, auditors will have determined an amount of performance materiality. The difference between financial statement materiality and performance materiality is a cushion for misstatements that were undiscovered by the auditors. Small misstatement are also considered material if they: Mask a change in earnings or other trends, Hide a failu(cid:396)e to (cid:373)eet a(cid:374)al(cid:455)sts(cid:859) (cid:272)o(cid:374)se(cid:374)sus e(cid:454)pe(cid:272)tatio(cid:374)s fo(cid:396) the (cid:272)lie(cid:374)t, Change a loss into net income or vice versa, Concern a segment of the business that is considered significant, Affe(cid:272)t the (cid:272)lie(cid:374)t(cid:859)s (cid:272)o(cid:373)plia(cid:374)(cid:272)e (cid:449)ith (cid:396)egulato(cid:396)(cid:455) (cid:396)e(cid:395)ui(cid:396)e(cid:373)e(cid:374)ts, Have the effect of increasing management compensation. involve concealment of unlawful transactions, or. The practical audit objectives are to obtain and evaluate evidence about assertions made by management in financial statements.