Planning Materiality c a S eS inc lu de d in t hiS Se ction

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7.1 Anne Aylor, Inc.

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Determination of Planning Materiality and Tolerable Misstatement

ot he r c aSe S t h at diScuSS topicS related to thiS Section 5.6

Scoping and Evaluation Judgments in the Audit of Internal Control over Financial Reporting 12.1 EyeMax Corporation . . Evaluation of Audit Differences
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Sarbox Scooter, Inc.

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12.2 Auto Parts, Inc. . . . . . . . . . . . . . . . . . . . . . . . . Considering Materiality When Evaluating Accounting Policies and Footnote Disclosures
The cooperative activity called Homework Review could be used to discuss the students’ answers to requirement 2. The basic process for this activity is to have the students meet in small groups to compare and discuss their responses on the planning materiality and tolerable misstatement working papers. The tasks of explaining each response on the working papers and checking the accuracy of each explanation should be rotated among group members. After students have had the opportunity to review all their responses the instructor can randomly call on individual students to share their responses with the class. It is important for the instructor to randomly call on individual students to ensure that all students take responsibility for learning the material.

PROFESSIONAL STANDARDS

Relevant professional standards for this assignment are AU Section 310, “Appointment of the Independent Auditor,” AU Section 311, “Planning and Supervision,” AU Section 312, “Audit Risk and Materiality in Conducting an Audit,” and AU Section 350, “Audit Sampling.”

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instructor resource Manual — do not coPy or redistribute

case 7.1: anne aylor, inc. Q u eS ti onS and Su GG e St e d Sol ution
[1]

Review Exhibits 1 and 2; audit memos G 3, and G 4; and audit schedules G 5, G 6-1, and G 6-2. Based on your review, answer each of the following questions: