Explain the role of materiality in the preparation

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Reference no: EM132650933

This reporting season may not provide much of a guide to future earnings numbers, but will provide some insight into how the companies are coping with, and responding to, the biggest challenge [COVID-19] the corporate sector - and the wider economy - has experienced in at least 30 years." Stephen Bartholomeusz Senior business columnist The most important, and meaningless, reporting season in history The Age August 10, 2020

Assume you are a winter vacation intern at the Melbourne office of an international accounting firm and have been assigned by a partner of the firm to a team that will produce for the partner a business report about the ASX listed companies: Nick Scali Limited, JB Hi-Fi Limited, Cochlear Limited and Virtus Health Limited. Specifically, the partner asks the team to write a report that:

Question i. explains:

any four accounting policies common to all four companies used in the preparation of their financial statements;
the changes in accounting policies used in the financial statements prepared by the four companies (if any);
how significant events after the reporting period have been treated in the financial statements and the notes to the financial statements by the four companies (if any);
the role of materiality in the preparation of the financial statements and the notes to the financial statements of the four companies;

Question ii. identifies the approaches taken by the four companies to reporting in the financial statements and the notes to the financial statements on the effects of COVID-19 on current and future operations;

Question iii. evaluate the usefulness of this information to users of the financial statements and the notes to the financial statements of the four companies. The evaluation must include identification of whether the team finds the provided information strengthens or weakens the usefulness of the financial statements and the notes to the financial statements; and

Question iv. provides three recommendations that could be implemented by accounting standard setters to improve the quality of reporting by companies.

Reference no: EM132650933

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