Answer:
Trial Balance base generally are total assets, liability, expense and revenue. We have selected Revenue as the basis for calculating planning materiality.
Profit is not an appropriate basic because Cloud 9 is projecting a loss result for the year ended. The entity is essentially revenue share in Australian market. The revenues used should be the aggregate revenues as this drives the normal operations of the business. However, as the other revenues are immaterial, their inclusion in the base figure would not materially impact the planning materiality calculation. Revenues should be annualised to represent a full year of operations.
Based on those, planning materiality should be set at 5%
Total revenue from normal operations = $277,338,461 + 269,442,308 = $546,780,769
Annualised revenue = $656,136,923
Planning materiality at 5% = $32,806,846
Cloud 9 - Continuing Case W&S Partners has just won the January 31, 2023, audit for...
Cloud 9 - Continuing Case W&S Partners has just won the January 31, 2023, audit for Cloud 9. The audit team assigned to this client is: • Partner, Jo Wadley • Audit manager, Sharon Gallagher • Audit senior, Josh Thomas • IT audit manager, Mark Batten • Experienced staff, Suzie Pickering • First-year staff, Ian Harper As a part of the risk assessment phase for the new audit, the audit team needs to gain an understanding of Cloud 9's structure...
please
do all parts!!
Cloud 9 - Continuing Case W&S Partners has just won the January 31, 2023, audit for Cloud 9. The audit team assigned to this client is: • Partner, Jo Wadley • Audit manager, Sharon Gallagher • Audit senior, Josh Thomas • IT audit manager, Mark Batten • Experienced staff, Suzie Pickering • First-year staff, lan Harper As a part of the risk assessment phase for the new audit, the audit team needs to gain an understanding...
Cloud 9 - Continuing Case W&S Partners use the following percentages as starting points for the various benchmarks: W&S Partners has just won the January 31, 2023, audit for Cloud 9. The audit team assigned to this client is: Threshold (%) Benchmark • Partner, Jo Wadley • Audit manager, Sharon Gallagher Income before tax 5.0 Total revenue 0.5 Gross profit 2.0 • Audit senior, Josh Thomas Total assets 0.5 • IT audit manager, Mark Batten Equity 1.0 • Experienced staff,...
Cloud 9 Ltd. Case Book Assignment 2.1 a (Essay)
Planning materiality
W&S Partners’ audit methodology dictates that one planning
materiality (PM) amount is to be used for the financial statements
as a whole. Further, only one basis should be selected—a blended
approach or average should not be used. The basis selected is the
one determined to be the key driver of the business.
W&S Partners uses the following percentages as starting points
for the various bases. These starting points can...
Need to compute horizontal and vertical analysis for
information below
Cloud 9, Inc. Trial Balance 31-Oct-22 31-Oct-21 Debit Credit Debit Credit Credit $ 61 13,446,154 70,485,625 6,123,884 64,867,910 $ 704,856 648,679 55,100,000 13,419,231 2,857,692 9,265,385 103,803,846 57,900,000 13,805,769 3,584,615 6,446,154 97,576,923 39,761,538 35,207,692 3,723,007 3,851,923 9,557,692 8,410,849 Cash and cash equivalents Accounts receivable Allowance for doubtful accounts Inventory Investments (derivatives) Deferred income taxes (current) Prepaid expenses and other current assets Property, plant, and equipment Accumulated depreciation Identifiable intangible assets and...
31-Oct-22 Debit Cloud 9, Inc.Trial Balance 31-Oct-21 Credit Debit Credit $ $ 13,446,154 70,485,625 6,123,884 64,867,910 $ 704,856 $ 648,679 55,100,000 13,419,231 2,857,692 9,265,385 103,803,846 57,900,000 13,805,769 3,584,615 6,446,154 97,576,923 39,761,538 35,207,692 3,723,007 3,851,923 8,410,849 Cash and cash equivalents Accounts receivable Allowance for doubtful accounts Inventory Investments (derivatives) Deferred income taxes (current) Prepaid expenses and other current assets Property, plant, and equipment Accumulated depreciation Identifiable intangible assets and goodwill Accumulated amortization Deferred income taxes and other assets (noncurrent) Current portion...
Cloud 9 - Continuing Case Sharon Gallagher, Josh Thomas, and Jo Wadley work for the audit firm W&S Partners. Sharon is an audit manager, Josh is an audit senior, and Jo is an audit partner. They meet to discuss the results of a survey of other offices of W&S Partners, as well as their own office. The survey was directed toward determining if W&S Partners had any independence problems with respect to a new prospective client, Cloud 9 Inc. Based...
W&S Partners began the planning phase of the Cloud 9 audit.
As part of the risk assessment phase for the new audit, the audit
team needs to gain an understanding of Cloud 9’s structure and its
business environment, determine materiality, and assess inherent
risk. This will assist the team in developing an audit strategy and
designing the nature, extent, and timing of audit procedures.
Answer the following questions based on the additional information
about Cloud 9 presented in the appendix...
Parker is the in-charge auditor for the upcoming annual audit of FGH Company, a continuing audit client. Parker will supervise two assistants on the engagement and will visit the entity before the fieldwork begins. Parker has completed the engagement letter and established an understanding with the Chief Internal Auditor on the assistance to be provided by the internal audit function. Which of the following activities should be considered as preliminary engagement and planning activities? (Select all that apply.) Reading the...
Review Garcia and Foster’s calculations of materiality
thresholds for the 20X2 Audit . Determine if the auditors correctly
applied the materiality concept in their risk assessment
procedures. Describe any problems you find and provide suggestions
for improvement. This question relates to step 2 of the Garcia and
Foster Audit Plan.
Step 2: Requires the audit team to obtain and document its
understanding of the client’s environment including internal
controls. This understanding allows auditors to identify
significant risks in the audit...