PART A Determine the level of materiality to be used for the audit of Lion Town...

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PART A Determine the level of materiality to be used for the audit of Lion Town resources ltd 's group accounts for the year ending 2023. Your answer should include a discussion of the nature of materiality, and a description of what materiality represents in terms of the audit of a set of financial statements and should discuss the different bases and considerations employed in arriving at materiality. Explain the rationale behind your choice of a certain level of materiality. You must also provide a quantitative estimate of materiality for your company. PART B I The partner has requested that you prepare an excel spreadsheet of the balance sheet, the profit and loss statement, and the statement of comprehensive income for the three financial years between 2021 and 2023 for your allocated company. The partner suggests that, as a minimum, you address key balance sheet and profit and loss horizontal analysis, vertical analysis and ratios over the period 2021 to 2023. Not only must you prepare the ratios, you must also comment on the ratios from an audit perspective, paying particular attention to at least five areas that require special audit consideration either because of their importance to the company's financial position, profitability, or viability, or because the ratio(s) indicate a potential risk. Justify your comments ACCOUNT DETAILS 2021 VERTICAL 2021 VERTICAL 2022 2022 2023 VERTICAL 2023 BASE Current Assets Bank 50 62.50% 60 60% Horizontal Analysis 100% 120% 70 140% 58.30% Total Current Assets 50 60 70 Horizontal Analysis 100% 120% 140% Non-current assets Equipment 30 37.5% 40% 40% 50% 41.7% Horizontal Analysis 100% 133% 167% Total Assets (Base for Vertical) 80 100% 100 100% 120 100% Horizontal Analysis 100% 125% 150% Current Liabilities Accounts Payable 10 12.5% 20 20% 30 25% Horizontal Analysis 100% 200% 300% Total Current Liabilities 10 20 30 Horizontal Analysis 100% 200% 300% Net Assets 70 80 90 Horizontal Analysis 100% 117% 133% Owner Equity CAPITAL 70% 87.5% 80 80% 90 75% Horizontal Analysis 100% 117% 133% Total Owners Equity 70 80 90 PART A Determine the level of materiality to be used for the audit of Lion Town resources ltd 's group accounts for the year ending 2023. Your answer should include a discussion of the nature of materiality, and a description of what materiality represents in terms of the audit of a set of financial statements and should discuss the different bases and considerations employed in arriving at materiality. Explain the rationale behind your choice of a certain level of materiality. You must also provide a quantitative estimate of materiality for your company. PART B I The partner has requested that you prepare an excel spreadsheet of the balance sheet, the profit and loss statement, and the statement of comprehensive income for the three financial years between 2021 and 2023 for your allocated company. The partner suggests that, as a minimum, you address key balance sheet and profit and loss horizontal analysis, vertical analysis and ratios over the period 2021 to 2023. Not only must you prepare the ratios, you must also comment on the ratios from an audit perspective, paying particular attention to at least five areas that require special audit consideration either because of their importance to the company's financial position, profitability, or viability, or because the ratio(s) indicate a potential risk. Justify your comments ACCOUNT DETAILS 2021 VERTICAL 2021 VERTICAL 2022 2022 2023 VERTICAL 2023 BASE Current Assets Bank 50 62.50% 60 60% Horizontal Analysis 100% 120% 70 140% 58.30% Total Current Assets 50 60 70 Horizontal Analysis 100% 120% 140% Non-current assets Equipment 30 37.5% 40% 40% 50% 41.7% Horizontal Analysis 100% 133% 167% Total Assets (Base for Vertical) 80 100% 100 100% 120 100% Horizontal Analysis 100% 125% 150% Current Liabilities Accounts Payable 10 12.5% 20 20% 30 25% Horizontal Analysis 100% 200% 300% Total Current Liabilities 10 20 30 Horizontal Analysis 100% 200% 300% Net Assets 70 80 90 Horizontal Analysis 100% 117% 133% Owner Equity CAPITAL 70% 87.5% 80 80% 90 75% Horizontal Analysis 100% 117% 133% Total Owners Equity 70 80 90

Answer rating: 100% (QA)

PART A Materiality is a concept used in auditing that refers to the significance or importance of an ... View the full answer