[Anonymous]

Under Planning and Supervision, part of developing a strategy includes “when assessing materiality, use smallest level of misstatement” what does that mean (in laymen’s language)?? Thanks

[Gerg, CPA]

let's say you are willing to accept a $5,000 misstatement on the balance sheet AND a $10,000 misstatement on the income statement, AND a $7,000 misstatement on the cash flow. You might think that you would average them and that the result ($9,000) would be the misstatement that you would accept for the financial statements as a whole. But NO. You would use the smallest amount of $5,000. You want to use one materiality threshold for the financials, rather than 3 (or more).

Hopefully this helps. I'm also working on AUD (rematch #4). Good Luck!

FAR - 1/26/2012 - PASSED (78, but Lost credit), re-do 11/27/2013 - PASSED (87)!
AUD - EPIC FAIL, 71, 69; 68; 5/25/2013 - PASSED (85)!
REG - 10/1/2012 - 72; 7/1/2013 - 73 UGH, 10/1/2013 - PASSED (85)!
BEC - 2/28/2013 - PASSED (82)!
Licensed CPA!

Used Becker self-study materials (just this for FAR original & REG #1), WileyTestBank, NINJA notes/audio, and Roger cram course for AUD #5, REG #3 & FAR reboot. CPA!

[Anonymous]

Thanks! Good luck!

[Gerg, CPA]

the avg would actually be $7,333, but it's irrelevant because you use the smallest ($5,000)

FAR - 1/26/2012 - PASSED (78, but Lost credit), re-do 11/27/2013 - PASSED (87)!
AUD - EPIC FAIL, 71, 69; 68; 5/25/2013 - PASSED (85)!
REG - 10/1/2012 - 72; 7/1/2013 - 73 UGH, 10/1/2013 - PASSED (85)!
BEC - 2/28/2013 - PASSED (82)!
Licensed CPA!

Used Becker self-study materials (just this for FAR original & REG #1), WileyTestBank, NINJA notes/audio, and Roger cram course for AUD #5, REG #3 & FAR reboot. CPA!

[Author]

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