Page 103 - AAA Integrated Workbook STUDENT S18-J19
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Planning, materiality and assessing the risk of material misstatement
4.5 Additional information to help plan the audit
In the exam you may be asked to suggest additional information to help plan the
audit. The scenario will have provided some information on the client, but in order to
fully identify the risks, further information will be required.
Additional information is the evidence the auditor will seek to obtain when performing
audit procedures to provide sufficient appropriate evidence regarding the risks
identified.
Example 1
Legal claim filed against the client
During your risk assessment you discover that a customer has filed a claim
against the company for an injury suffered on the company’s premises.
If the claim is probable to succeed the company should recognise a provision.
If the claim is only possible to succeed the company should disclose a
contingent liability.
Additional information is required to assess the appropriate accounting
treatment. This could be correspondence from the company’s lawyers
outlining their professional view regarding the likely outcome of the case and
amount of compensation that may need to be paid.
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