QUESTION 1

In February 2012, the Australian Accounting Standards Boards decided at its meeting to propose the

withdrawal of

AASB 1031 Materiality.

There were several reasons for this proposal which includes: there is

no International Reporting Standard equivalent and it does not look like there will be, since 2005 there has

been the gradual withdrawal of additional Australian guidance from a number of Australian Accounting

Standards, and there is now an updated guidance on materiality in the

IASB Conceptual Framework

.

The major impact of the withdrawal of

AASB 1031

is the removal of the specific quantitative guidance for

materiality. The withdrawal of

AASB 1031

became effective to annual reporting beginning on or after 1 July

2015.

REQUIRED:

1.

Summarize the significant changes with

AASB 1031 Materiality

(issued by the Australian

Accounting Standards Boards - AASB) from 1995 to 2015. (8 Marks)

2.

Prior

to the withdrawal of

AASB 1031

and with reference to the

AASB 1031 Materiality

(issued by the

Australian Accounting Standards Boards - AASB) and the

ASA 320 Materiality in Planning and Performing

an Audit

and

ASA 450 Evaluation of Misstatements Identified during an Audit

(

issued by the Auditing and

Assurance Standards Board - AUASB), (12 Marks):

a.

Define materiality.

b.

Outline the qualitative and quantitative guidelines of materiality.

c.

How the concepts and constructs of "materiality" influence the auditors' professional

judgment on misstatements.

3.

Post

withdrawal of

AASB 1031

, would this harmonise/bring uniformity to auditors' assessment of

materiality misstatements or would this bring disparity to auditors' assessment of misstatements? What

other influence this would bring to the auditors' judgment on misstatements? Discuss your answer and

rationale. (Support your answers with the relevant Australian Accounting Standards and Australian

Auditing Standards as well as published Peer-reviewed Academic Journals and Articles.) (10 Marks)

NOTE

: In answering Question 1, use Harvard referencing style and support your answers with relevant

accounting and auditing standards as well as published peer-reviewed academic journals. A minimum of 5

peer-reviewed academic journals is expected. (Hint: this is a great opportunity to utilise the University's Library

Services online such as Library Search, Advance Search, eJournals and Databases such as EBSCOhost, etc.)