Reference no: EM13550174
For each of the following scenarios, perform the three steps in the materiality process: (1) determine planning materiality, (2) determine tolerable misstatement, and (3) evaluate the audit findings.
Assume further that the auditor's firm provides guidance that tolerable misstatement will be set 50% of planning materiality.
Scenario 1:
Murphy & Johnson is a manufacturer of small motors for lawnmowers, tractors, and snowmobiles. The components of its financial statements are (1) net income before taxes = $21 million, (2) total assets = $550 million, and (3) total revenues = $775 million. Murphy & Johnson uses maximum percentage applicable on net income for determining planning materiality.
a. Determine planning materiality, and tolerable misstatement. Justify your decisions.
Planning materiality $
Tolerable misstatement $
During the course of the audit, Murphy & Johnson's CPA firm detected two misstatements that aggregated to an overstatement of net income of $1.25 million.
b. Evaluate the audit findings. Justify your decisions.
Scenario 2:
Delta Investments provides a group of mutual funds for investors. The components of its financial statements are (1) net income before taxes = $40 million, (2) total assets = $4.3 billion, and (3) total revenues = $900 million. Murphy & Johnson uses maximum percentage applicable on total assets for determining planning materiality.
a. Determine planning materiality, and tolerable misstatement. Justify your decisions. (Enter your answers in millions, not thousands, of dollars. Round your answers to 2 decimal places. Omit the "tiny_mce_markerquot; sign in your response.)
Planning materiality $
Tolerable misstatement $
During the course of the audit, Delta's CPA firm detected two misstatements that aggregated to an overstatement of net income of $5.75 million.
b. Evaluate the audit findings. Justify your decisions.
Scenario 3:
Swell Computers manufactures desktop and laptop computers. The components of the financial statements are: (1) net income before taxes $500,000, (2) total assets = $2.2 billion, and (3) total revenues = $7 billion. Swell Computers uses total assets for determining planning materiality.
a. Determine planning materiality and tolerable misstatement. Justify your decisions. (Enter your answers in millions, not thousands, of dollars. Round your answers to 1 decimal place. Omit the "tiny_mce_markerquot; sign in your response.)
Planning materiality $
Tolerable misstatement $
During the course of the audit, Swell's CPA firm detected one misstatement that resulted in an overstatement of net income by $1.5 million.
b. Evaluate the audit findings. Justify your decisions.
Determine what impulse is experienced by the rocket
: A 1000 kg experimental rocket sled on a level frictionless rails is loaded with 50 kg of propellant. what impulse is experienced by the rocket
|
Define the temperature is changed from 100 degrees c
: For 1 mol of an ideal gas, pext = p = 101 kPa (pressure remains constant). The temperature is changed from 100 degrees C to 25.0 degrees C. Calculate q, w, ΔU and ΔH. Assume CV,m = 3/2 R.
|
Compute the work w for the process
: 7. 2.00 moles of an ideal gas at 20.0 degrees C expands isothermally from an initial volume of 20.0 L to a final volume of 40.0 L. Calculate the work, w, for this process (a) for expansion against constant pressure of 105 Pa, and (b) if the expans..
|
How much water would this amount of energy evaporate
: During exercise, a person gives off 150 Calories of heat in 22 minutes. How much water would this amount of energy evaporate
|
Evaluate the audit findings
: Evaluate the audit findings - Determine planning materiality, and tolerable misstatement
|
What length of flywheel would you need in that case
: It has been suggested that we should use our power plants to generate energy in the off-hours (such as late at night) and store it for use during the day. What length of flywheel would you need in that case
|
Explain the analyzed solution
: If a solution of compound S (MW = 300) with a known ? of 40,000 at ?max of 360 nm gave an absorbance of 1.0 in a 1.00-cm cell, how many mg of compound S was present in 1.0 mL of the analyzed solution
|
Explain separation of the components of a mixture
: In the experiment "Separation of the Components of a Mixture" A student found that her mixture was 13% NH4Cl, 18% NaCl, and 75% Sio2. Assuming that her calculations are correct, what did she most likely do incorrectly in her experiment
|
Determine the possible thermal efficiency of the power plant
: A nuclear power plant generates 2000 MW of heat energy from nuclear reactions in the reactor's core. determine the possible thermal efficiency of the power plant
|