Sarbox Scooter, Inc

1674 Words7 Pages
Sarbox Scooter, Inc [a] What should the auditor consider when determining whether an account should be considered Significance is determined by applying quantitative and qualitative measures of materiality to the consolidated financial statements. Auditors need to consider both quantitative and qualitative measures of materiality, and some special factors also need to be considered to identify significant accounts. The Audit Policy of Delmoss Watergrant LLP shows the consideration to identify significant accounts. From a quantitative standpoint, planning materiality need to be considered when identifying significant accounts. “The more an account exceeds planning materiality, the greater the likelihood it should be considered a significant account, even when the qualitative risk factors are low.” However, this doesn’t mean that an account that exceeds planning materiality is automatically a significant account. Qualitative factors may also lead auditor to consider an account to be significant even if this account or disclosure is less than planning materiality. According to Delmoss Watergrant’s policy, accounts are considered to be significant if they are impacted by inherent and fraud risks that have a reasonable possibility of resulting in a material misstatement, either on an individual or an aggregate basis. [b] What qualitative factors might cause an account that is otherwise relatively small quantitative Some accounts might not be quantitatively significant at any point in time, but they include significant activity. Under this situation, these accounts should be considered significant accounts. For example, cash, work in process, and suspense accounts. [c] What qualitative factors might cause an account that is greater than materiality to be Accounts that have low susceptibility to error

More about Sarbox Scooter, Inc

Open Document