Question
Calculate the materiality level of each of the clients below: Client No. Total Assets Total Revenues Materiality Level A P6 million P7 million ? B
Calculate the materiality level of each of the clients below: Client No. Total Assets Total Revenues Materiality Level A P6 million P7 million ? B P50 million P65 million ? C P500 million P900 million ? D P1.4 billion P1.5 billion ? Based on the above overall materiality levels, the auditor may consider the overall engagement risk and the history of booked audit adjustments in determining the percentage for performance materiality. Assuming based on the auditors judgment, the following rationale and percentages have been determined: 50 Rationale for higher performance materiality Rationale for lower performance materiality Overall engagement risk Low High History of booked audit adjustment Limited to none Frequent Fraud Risk Low High Threshold to adopt based on professional judgment and understanding of the entity 25% lower than overall materiality 50% lower than overall materiality Compute the Performance materiality for the four clients above
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