One of the clients of MMM Chartered Accountants operates a restaurant. From January of the current year, the business has consistently paid its suppliers late, well in excess of the suppliers' normal credit terms. This has resulted in some suppliers requesting cash on delivery from the business. The auditor has reviewed the correspondence between the business andits bank and finds that the business has been experiencing cash flow problems for two years. (b) Explain whether (and, if so, how) the information provided impacts on the auditor's assessment of preliminary materiality

One of the clients of MMM Chartered Accountants operates a restaurant. From January of the current year, the business has consistently paid its suppliers late, well in excess of the suppliers' normal credit terms. This has resulted in some suppliers requesting cash on delivery from the business. The auditor has reviewed the correspondence between the business andits bank and finds that the business has been experiencing cash flow problems for two years. (b) Explain whether (and, if so, how) the information provided impacts on the auditor's assessment of preliminary materiality

Principles of Accounting Volume 1

19th Edition

ISBN:9781947172685

Author:OpenStax

Publisher:OpenStax

Chapter3: Analyzing And Recording Transactions

Section: Chapter Questions

Problem 3TP: Assume that you are the controller of a business that provides legal services to clients. Suppose...

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One of the clients of MMM Chartered Accountants operates a restaurant. From January of the current year, the business has consistently paid its suppliers late, well in excess of the suppliers' normal credit terms. This has resulted in some suppliers requesting cash on delivery from the business. The auditor has reviewed the correspondence between the business and its bank and finds that the business has been experiencing cash flow problems for two years. Explain whether (and, if so, how) the information provided impacts on the auditor's assessment of preliminary materiality
One of the clients of MMM Chartered Accountants operates a restaurant. From January of the current year, the business has consistently paid its suppliers late, well in excess of the suppliers' normal credit terms. This has resulted in some suppliers requesting cash on delivery from the business. The auditor has reviewed the correspondence between the business and its bank and finds that the business has been experiencing cash flow problems for two years. Explain why determination of materiality is a matter of auditor judgment. Refer to both qualitative and quantitative materiality assessments Explain whether (and, if so, how) the information provided impacts on the auditor's assessment of preliminary materiality
One of the clients of MMM Chartered Accountants operates a restaurant. From January of the current year, the business has consistently paid its suppliers late, well in excess of the suppliers' normal credit terms. This has resulted in some suppliers requesting cash on delivery from the business. The auditor has reviewed the correspondence between the business andits bank and finds that the business has been experiencing cash flow problems for two years. (a) Explain why determination of materiality is a matter of auditor judgment. Refer to both qualitative and quantitative materiality assessments (2 marks). (150 - 200 words)
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One of the clients of MMM Chartered Accountants operates a restaurant. From January ofthe current year, the business has consistently paid its suppliers late, well in excess of thesuppliers' normal credit terms. This has resulted in some suppliers requesting cash on deliveryfrom the business. The auditor has reviewed the correspondence between the business andits bank and finds that the business has been experiencing cash flow problems for two years. Required:(a) Explain why determination of materiality is a matter of auditor judgment. Refer toboth qualitative and quantitative materiality assessments . (b) Explain whether (and, if so, how) the information provided impacts on the auditor'sassessment of preliminary materiality.
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