Discuss All the Factors an Auditor Should Consider in Making

question 12

Essay

Discuss all the factors an auditor should consider in making a materiality judgment.

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Definitions:

Direct Method

A cash flow statement preparation approach that presents major classes of gross cash receipts and payments, offering a detailed view of cash flow from operating activities.

Cash Flow Statement

A financial document that provides aggregated data regarding all cash inflows a company receives from its ongoing operations and external investment sources, as well as all cash outflows that pay for business activities and investments during a given period.

Income Taxes

Taxes charged on the income of individuals or entities (corporations), based on the income or profit earned within a tax period.

Operating Activity

Activities that relate directly to the primary business operations of a company, such as sales and service revenues and associated costs.