Auditing Cases 6th Edition by Mark Beasley,Frank Buckless,Steven Glover,Douglas Prawitt

Exercise 2

Referring to Delmoss Watergrant's policy for identifying significant accounts (see Appendix as well as Sarbox Scooter's consolidated balance sheet and income statement, answer the following questions:
[a] Determine a planning materiality threshold to use to identify significant accounts for Sarbox Scooter. Please show your work and justify judgments.
[b] At a consolidated financial statement level, are there accounts on Sarbox Scooter's financial statements that are greater than planning materiality that should not be considered significant Please justify your response.
[c] Identify two accounts, at the consolidated level, that are not quantitatively significant, but that should be deemed significant due to qualitative factors. Provide the qualitative factors you considered.
[d] Which Sarbox Scooter business units (geographic locations), if any, would not be considered quantitatively significant Which business units (locations) have specific risks that would render the unit significant regardless of its quantitative size
[e] If you had to eliminate or scope out one entire business unit (geographic location), which unit would it be Please justify your response and include both quantitative and qualitative reasons for doing so.