Accounting and Auditing

p Accounting and Auditing

Introduction

A planning memo is presented in this report in respected of Jeff D 'Angelo Chrysler Jeep Dodge , where application of materiality issue is considered from individual as well as groups of accounts . An analytical review has also been undertaken with regard to companies financial performance for 2008 as compared with its previous year performances Finally there is recognition of GAAP areas that normally remain un- complied with in dealerships like Jeff D 'Angelo

Materiality Calculations

Assessment of materiality is a matter of auditor 's judgment

. It is observed that for Jeff D 'Angelo 2008 as compared to 506058 in 2007 and that is an increase of 52 .67 relatively over 2007 . Accordingly without considering the significant deficiencies , the potential for unidentified errors leading to misstatements is taken as 50 (rounded from 52 .675 increase ) of materiality relating to profitability . That is to say errors or mistakes that could effect misstatement 133 thousands (that is 50 of increase in profits ) will be considered as material misstatement in financial statements

Significant items that may be considered material in contribution to misstatements in the balance sheet are Contract in transits and Holdbacks shown as receivable , reduction of inventory in used cars , and Notes receivables . Similarly in Income statement the sales from Parts under Customer service and Warrantee service , and also the sale of New and Used Truck sales are considered material factors that may add to misstatements of profitability

Using a rule...