Auditing Planning Materiality

Question: Discuss about theAuditingfor Planning Materiality. Answer: Planning Materiality The auditor of the organization is required to comply with the standards of auditing while conducting the materiality in planning the audit procedures of the financial information. According to the auditing standard 320 Materiality in planning and performing an audit auditor is responsible to apply the concept of materiality in planning the audit of financial reports in order to examine and verify the misstatements, errors and omissions. The auditor provides reasonable assurance in planning the audit to form the judgment on the size of material misstatements to determine the nature, time and extent of risk assessment procedures (Baldauf, Steller and Steckel 2015). Materiality Justification Base Selected and Percentage Applied: Considering the annual report of Boral Limited for the financial year 2015 to determine the planning materiality it is essential to determine the base and apply relevant percentage to form the performance judgment (Martin and Van Linden 2015). In order to justify the materiality significant base selected and respective percentage applied are 7% of income from continuing operations, 5% of financial income, 7% of the total asset value and 2% of other income. Base Amount Selected and Percentage Applied: In order to determine the planning materiality the base amount of Boral Limited for the financial year 2015 was selected on the basis of qualitative items. Revenue of the organization is important to be examined amounted to $4,298 million in the year 2015 while it was $4,326 million in 2014. The revenue in the current year dropped by almost 1% hence, the reason of such decrease is required to be identified. Material justification with respect to the current assets amount to $1,741 million in 2015 and plants and equipment amounted to $2,448 million is to be examined for the materiality by applying 7% margin. Reference List Baldauf, J., Steller, M. and Steckel, R., 2015. The Influence of Audit Risk and Materiality Guidelines on Auditors Planning Materiality Assessment.Accounting and Finance Research,4(4), p.p97. Martin, R. and Van Linden, C., 2015. Big Dreams and Little Money for Speech Recognition: Revenue Generation by Outsourcing Research and Development.Journal of the International Academy for Case Studies,21(6), p.309.