We use cookies to create the best experience for you. Keep on browsing if you are OK with that, or find out how to manage cookies.
Nobody downloaded yet

Tolerable Misstatement - Assignment Example

Comments (0) Cite this document
Name Instructor Course 1 October 2012 Explanations to support Work Paper 3-8 ACCOUNT NAME TOLERABLE MISSTATEMENT EXPLANATION Cash and cash equivalents $100 Because of the cash is easy to verify and exist. Furthermore, the auditor will not challenge difficulty to audit it…
Download full paper
Tolerable Misstatement
Read TextPreview

Extract of sample
Tolerable Misstatement

Download file to see previous pages... There is normally a high risk of misstatement for accounts receivable as there is a possibility that debts may not be collectible due to the inability of customers (debtors) to pay. It is important to ensure that the amounts are collectible so that adequate provisions can be made. Tests should be done to determine the age of the debts in comparison to the terms given to debtors’ confirmations should also be sent on the bass of materiality. Additionally, the auditor should ensure that amounts stated as receivables are not disputed due to poor record keeping or inadequate controls over cash receipts. The amount represented by 2% is $172. Therefore, if the amounts are misstated by that amount it is not a major problem. However, if the amount by which the figure is misstated is greater than $172 then there is a cause for concern. The receivables figure has declined by over 30% while revenues have increased. It is important to determine the reason for this. Receivables are susceptible to both intentional and unintentional misstatements and a lot of work will be required to verify such balances. Prepaid advertising $200 The tolerable misstatement of 2% is within the limits recommended (Willis & Adams 3-2). Prepaid advertising is a current asset that may be fairly easy to check as it involves making a determination of the amount paid for advertising. However, if the number of advertisements is large or the dates when the advertisement should start and end are not recorded then there is the risk that it may be misstated. Explanations to support Work Paper 3-8, continuing ACCOUNT NAME TOLERABLE MISSTATEMENT EXPLANATION Computer hardware and software $400 The change over prior year is approximately 8% and indicates that there were substantial additions to this fixed asset. It is normal that all additions to fixed assets are verified. Additionally, the amounts amortized should be tested to ensure that the computations are accurate. Furthermore, they should be checked to ensure that the assets included are properly classified. However, a 1% misstatement is immaterial and therefore tolerable (Willis & Adams 3-2). Leasehold improvements $150 The tolerable misstatement of 5% appears to be rather high since this is a fixed asset. This type of asset normally requires 100% verification. However, there has been no major change in leasehold improvements from the prior year. Willis & Adams (3-2) indicates that the tolerable limit for total assets is 0.5%. When compared to total assets the amount is very immaterial and so a tolerable limit of 5% for this asset is immaterial. Accumulated depreciation and amortization $150 The amount for depreciation is prone to error and it has to be thoroughly checked. There has been an approximate 15% increase and this increase needs to be verified. There is really no room for error as its calculation is very objective. Explanations to support Work Paper 3-8, continuing ACCOUNT NAME TOLERABLE MISSTATEMENT EXPLANATION Intangible assets, net $100 The valuation of intangible assets is subjective and so there is the risk of misstatement. Although the change is approximately 300% it is not large in comparison to other fixed assets. Since the total amount is small a tolerable misstatement of 6% would not significantly affect the materiality levels for total fixed assets. Accounts payable $180 Accounts payable is prone to misstatement and so companies are prone ...Download file to see next pagesRead More
Cite this document
  • APA
  • MLA
(“Tolerable Misstatement Assignment Example | Topics and Well Written Essays - 1000 words”, n.d.)
Retrieved from https://studentshare.org/finance-accounting/1457981-tolerable-misstatement
(Tolerable Misstatement Assignment Example | Topics and Well Written Essays - 1000 Words)
“Tolerable Misstatement Assignment Example | Topics and Well Written Essays - 1000 Words”, n.d. https://studentshare.org/finance-accounting/1457981-tolerable-misstatement.
  • Cited: 0 times
Comments (0)
Click to create a comment or rate a document
Auditing and Assurance Services (Australian)
The Company disclosed that the termination of the Project may result to the demand of the Group’s creditors for debt repayment, which will then give rise to a “material uncertainty regarding the Group’s ability to continue as a going concern” as it will be unable to pay such debts (Annual Report 2011, p.
3 Pages(750 words)Assignment
Scope of Liability for Negligent Misstatement by Professionals
A statement is referred to as a negligent misstatement if it is a representation of fact, recklessly made and on which the claimant relied on to his detriment. In the past cases for negligent misstatement were wound up with cases for pure economic loss. But even where there is physical loss, it seems liability for negligent advice is not excluded as was the decision in Clayton V Woodman, (1962).
8 Pages(2000 words)Assignment
Comptronix Corporation-Case study on identifying Inherent and Control Risk factors (Using the facts of the case and the relevant AUDITING standards, answer each of the questions)
Besides factors connected to the peculiar statement, the auditor needs to take external conditions into account that might help in controlling the Internal Risk. These can include the character of industry and business, the size of account balances, the integrity of
2 Pages(500 words)Assignment
Business Law
ive main factors: unfair traders’ practices, unconscionable conduct from the traders, misleading conduct, specific false representations and unfair practices. The protection from unconscionable conduct prohibits suppliers of products from engaging in unconscionable conduct
6 Pages(1500 words)Assignment
Auditing Assignment
the events between the date of the financial statements (date of last period covered by the financial reports) and the date of the auditor’s report (when they are made available to third parties) and facts after the auditor’s report (Ex CAS92). It necessary to compare
2 Pages(500 words)Assignment
The term material is of critical importance in the auditing context (Porter et al., 2014, p.73). Materiality levels are more secret than the Coca Cola formula (Mock et al., 2009, p.4). Discuss these abstracts in the context of academic r
The concept of materiality has been discussed in the reporting of financial statement frameworks by using different terms (OSSAI, 2014). After the financial crisis of 2008, accountability in business sectors has achieved considerable importance. Decisions are made on the
7 Pages(1750 words)Assignment
In a bid to ensure conformity and uniformity, bodies such as the International Financial and Reporting Standards prepared rules and regulations that should be followed when preparing the financial statements (Foster & Greenawalt 1995, pp.
6 Pages(1500 words)Assignment
Auditing- report of the real good food
In addition, the four accounts are accompanied by other notes such the auditor’s report, the director’s report, etc. On that note, the assignment presents analyses of the financial statement of Real Good Food PLC with respect to the
6 Pages(1500 words)Assignment
2010 was the 100th anniversary of The Big Burn of 1910, a massive fire that swept through large portions of the northwest. The following excerpt from an opinion piece from 2008 on the website WorldWorstDisaster outlines some of the effects and controversy
In this way, it is important that the wildfires are treated like natural hazards. Therefore, human beings should learn to co-exist and adapt to them as well as be in a
2 Pages(500 words)Assignment
Reading Assignment #3
the physical health of the person may be impossible, the caregivers continue to minister to the soul with the hope that it might change things for the better. Clinical transformation may have different meanings to different individuals, especially from different
1 Pages(250 words)Assignment
Let us find you another Assignment on topic Tolerable Misstatement for FREE!
Contact us:
Contact Us Now
FREE Mobile Apps:
  • About StudentShare
  • Testimonials
  • FAQ
  • Blog
  • Free Essays
  • New Essays
  • Essays
  • The Newest Essay Topics
  • Index samples by all dates
Join us:
Contact Us