Harry Kane Chartered Accountants (Harry Kane) and O’Giroud Manufacturing plc (O’Giroud) just signed their first audit engagement letter. You are the Audit Manager responsible for audit of O’Giroud’s Financial Statements for the year ended December 31, 2020. In addition to the extract of the Financial Statements below, O’Giroud has Profit before Tax of $30,000,000 (2019 - $31,000,000). O’Giroud Manufacturing plc Financial Statements (Extract) Year Ended December 31, 2020 Balance 2020 ($) 2019 ($) Cash 1,500,000 2,000,000 Inventory 1,900,000 900,000 Payables 1,000,000 990,000 Receivables 800,000 810,000 Property, Plant & Equipment 150,000,000 100,000,000 Loans 12,000,000 10,000,000 Payroll Expenses 4,900,000 6,500,000 Which balances would you consider to be significant to this year’s audit, based on the following, I. Materiality for Planning Purposes II. Analytical Procedures used at the Planning Stage
Harry Kane Chartered Accountants (Harry Kane) and O’Giroud Manufacturing plc (O’Giroud) just signed their
first audit engagement letter. You are the Audit Manager responsible for audit of O’Giroud’s Financial Statements
for the year ended December 31, 2020. In addition to the extract of the Financial Statements below, O’Giroud has
Profit before Tax of $30,000,000 (2019 - $31,000,000).
O’Giroud Manufacturing plc
Financial Statements (Extract)
Year Ended December 31, 2020
Balance 2020 ($) 2019 ($)
Cash 1,500,000 2,000,000
Inventory 1,900,000 900,000
Payables 1,000,000 990,000
Receivables 800,000 810,000
Property, Plant & Equipment 150,000,000 100,000,000
Loans 12,000,000 10,000,000
Payroll Expenses 4,900,000 6,500,000
Which balances would you consider to be significant to this year’s audit, based on the following,
I. Materiality for Planning Purposes
II. Analytical Procedures used at the Planning Stage
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