Exoreise 3.3 (Exhiblt 3.9) Preliminary Judgment about Materiality Client: Balance Sheet Dato: Prepared by: Determine the prelininary judgment about materialliy for the cllont as a wholo. Express your answer as a dollar amount. Dotermino the appropriate lovel of materiality based on all analyses comploted for the ellont thus far. Fully support and discuss the materiality level that you dotermine. Quantinthes Considerations: Because materiality is relathe, it is nocessary to have beses for establishing whether misstatements are material. A baso is a critical llom of which users tond to focus while making decisions. The base will vary dopending on the nature of the cliont's business. Typical bases may include not hoomo bofore taxes, not sales, total assets and stockholders' equily. Percentages typlealy range from 1%10% dopending on the base. \begin{tabular}{|l|l|l|l|} \hline Base (from previous year) & Dolar Amount of Base & Percentage Range & Base x Percentage \\ \hline & & & \\ \hline & & & \\ \hline & & & \\ \hline \end{tabular} Quallathe Considerntions: Certain types of misstatements are likely to be more inportant to users than others, even if the dollar amounts are the same. For examplo, misstatements that involve fraud may be more inportant to users than misstatements due to unintentional errors. Fraud reflects on the integrily of management and other employees of the client. Preliminary Judgment about Materialty: Combine the quanthathe and qualiative considerations into one overali materiality lovel. Discussion: Discuss how you arrived at this dollar amount for the prelininary judgment about materially, That is, how did you combine the quathetve and quanthathe conaiderations to arrive at this dollar amount? Exoreise 3.3 (Exhiblt 3.9) Preliminary Judgment about Materiality Client: Balance Sheet Dato: Prepared by: Determine the prelininary judgment about materialliy for the cllont as a wholo. Express your answer as a dollar amount. Dotermino the appropriate lovel of materiality based on all analyses comploted for the ellont thus far. Fully support and discuss the materiality level that you dotermine. Quantinthes Considerations: Because materiality is relathe, it is nocessary to have beses for establishing whether misstatements are material. A baso is a critical llom of which users tond to focus while making decisions. The base will vary dopending on the nature of the cliont's business. Typical bases may include not hoomo bofore taxes, not sales, total assets and stockholders' equily. Percentages typlealy range from 1%10% dopending on the base. \begin{tabular}{|l|l|l|l|} \hline Base (from previous year) & Dolar Amount of Base & Percentage Range & Base x Percentage \\ \hline & & & \\ \hline & & & \\ \hline & & & \\ \hline \end{tabular} Quallathe Considerntions: Certain types of misstatements are likely to be more inportant to users than others, even if the dollar amounts are the same. For examplo, misstatements that involve fraud may be more inportant to users than misstatements due to unintentional errors. Fraud reflects on the integrily of management and other employees of the client. Preliminary Judgment about Materialty: Combine the quanthathe and qualiative considerations into one overali materiality lovel. Discussion: Discuss how you arrived at this dollar amount for the prelininary judgment about materially, That is, how did you combine the quathetve and quanthathe conaiderations to arrive at this dollar amount
