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In the case of Cloud 9, the audit firm performed interim procedures and determined interim materiality based on annualized pre-tax income from the first 9
In the case of Cloud 9, the audit firm performed interim procedures and determined interim materiality based on annualized pre-tax income from the first 9 months of the fiscal year is likely this small of a change ($28K for a client with $360M in revenue is small potatoes) will not require us to re-do any audit procedures. Note: if materiality increases, we would not need to do any additional procedures because we would have over-tested which is not a significant audit risk. We are much more concerned with under-testing.
Cloud 9 Income Statements For the Years Ended January 31 Revenues Costs and expenses: Cost of sales Selling and administrative Interest expense Other (income)/expense, net Total costs and expenses Income before income taxes Income taxes Net income \begin{tabular}{rr} 222,496,154 & 207,838,462 \\ 104,450,000 & 100,246,154 \\ 1,257,692 & 1,730,769 \\ 1,311,539 & 796,154 \\ \hline 329,515,385 & 310,611,539 \\ 35,438,461 & 35,353,846 \\ 12,757,692 & 13,080,769 \\ \hline$22,680,769 & $22,273,077 \\ \hline \end{tabular}
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