- Explain and differentiate between planning, performance and specific materiality levels. You are not required to include references to relevant paragraphs of ISA (NZ)s. You must use your own words (i.e. you can paraphrase but not copy from the standards and other material. You need to cite your information sources).
(6 marks)
- Calculate a planning materiality level and a performance materiality level for the coming year audit. Justify your calculations.
(5 marks)
- Calculate specific materiality levels and specific performance materiality levels for the current assets – trade account receivables and inventory, and explain it is important to calculate these specific materiality levels.
(5 marks)
PART B – 10 marks
Following the planning stage of the audit you carry out the following steps:
- Gain an understanding of LQFL’s accounting information system and related internal controls.
- Perform walk-through procedures.
- Assess the internal control risks.
- Test the “strengths” of the internal controls by carrying out tests of controls.
- REQUIRED:
Describe and explain the objective of each of the above steps in the audit process.
