$7^1$

EXHIBITS

Income Statement

Balance Sheet

Excerpt$-$Auditor's Guidance

Company and Industry Information

Qualitative Analysis

Scroll down to complete all parts of this task.

Consolidated Construction Inc., an issuer, is a construction company with annual revenues of $$20$ million. As the audit senior engaged on Consolidated Construction's Year $6$ financial audit, you have been asked to calculate materiality as the engagement team plans the audit.

Using the exhibits, perform a quantitative analysis, perform a qualitative analysis, and determine the tolerable misstatement. In Part $1,$ determine overall materiality. In column B$,$ calculate and enter the current ratio rounded to two decimal places. In column C$,$ select the calculation approach the auditor should use. In column D$,$ calculate and enter audit materiality. In Part II$,$ perform a qualitative analysis and identify areas of qualitative concem for the Year $6$ audit. There are four areas of qualititative concern. In column B$,$ select an area from the options provided for each line. An option may be selected only once. In Part III, column B$,$ calculate and enter the tolerable misstatement and the allowable audit misstatement for select account balances identified in column A$.$ Enter amounts in whole dollars.

Part I: Quantitative Analysis

$\backslash$table$[[A,$B$,$C$,,],[1,$Quantitative Analysis,Current Ratio,Approach,Overall Materiality$],[2,$Overall materiality,$123,,]]$

Part II: Qualitative Analysis

$\backslash$table$[[,$A$,$B$],[1,$Qualitative concern $1,],[2,$Qualitative concern $2,],[3,$Qualitative concern $3,],[4,$Qualitative concern $4,]]$

Part III: Tolerable Misstatement and Specific Account Balance Materiality for Year $6$

$\backslash$table$[[1,$A Tolerable misstatement,B$],[2,\backslash$table$[[$Specific account: Account$],[$receivable$]],],[3$ Specific account: Revenue,,$]]$