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 Does the company maintain an iInternal check system regarding the records of the electricity Auto, Pattern: Clear
consumption of electric current by the consumers?. Formatted: Indent: Left: 1", No bullets or numbering
 Power purchase cost is a major component of cost as power is bought from various sources
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for the purpose of resale through Distribution Network, does the company maintain
inventory levels or purchase directly from the suppliers? Formatted: Font: 10 pt

 How does the company measure its Measuringpower the electricity consumption? As well Formatted: List Paragraph, Bulleted + Level: 1 +
as distribute its bills and collect its dues from the consumers. Aligned at: 0.5" + Indent at: 0.75"
 To what extent do these regulatory bodies ensure compliance of accounting policies and
legal requirements in your company?
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numbering
Billing the electricity consumption
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Distribution of bills to the customers

Collection of dues from the customers

Do each of the above functions maintain proper system of internal function to ensure that there
is no scope for lapses?
 Does the company have a proper control existing for verification of depreciation provided in
the fixed assets? As per accounting policy and as per prescribed rates for each category of
asset.
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 How does the company treat the heavy repair and expenditure? Aligned at: 0.5" + Indent at: 0.75"
 Do each of the above functions maintain proper system of internal function to ensure that
there is no scope for lapses?
 How is the cost of electricity being measured after it was generated by the Power Plant? Formatted: List Paragraph, Bulleted + Level: 1 +
Aligned at: 0.5" + Indent at: 0.75"

5. Audit Request from Client

 Trial Balance

 General Ledger

 Corporate Fformation Documents

 Board Of Directors Minutes

 Copies Of Any Communications With Regulatory Agencies

 Attorney Invoices Or Summary Of Ongoing Legal Matters

 QuickBooks Portable Copy (with admin password and version information)

 Bank Statements And Reconciliations

 Listing Of Cash Disbursements

 Accounts Receivable Aging

 Allowance For Doubtful Accounts Calculations Or Support

 Fixed Assets Listing

 Copies Of Any Leases

 Inventory records (and a separate inventory observation may need to be performed)

 Accounts Payable Aging

 Credit card statements

 Debt Agreements And Statements

 Support For Equity Transactions

 Revenues By Customer

 AccountingRevenue recognition Policiess

 Employee census

 Payroll And Human Resources Documentation

 Vacation policies

 Life insurance agreements

 Sampling employees, the auditor may request:

o HR file (I-9, W4, new hire checklist)

o Specific time and payroll records (time cards, approvals, pay approvals, payroll reports,
etc)

 Sampling revenues, the auditor may request (depending on the type of business):

o Purchase order from customer

o Pick ticket from warehouse

o Shipping documentation

o Invoicing information

o Collections information

 Sampling expenses, the auditor may request(depending on the type of business):

o Internal purchase order and approval

 o Vendor quote

o Billing of lading or similar receipt documentation

o Vendor invoice and approval

o Copy of cleared payment check

OVERALL MATERIALITYSetting up Materiality

Our team use the following table to help us determine appropriate parameters when calculating
the benchmark percentages and weighting factors for Overall Materiality.

Section Low Low to Medium Medium Medium to High High

Revenue 2%* 1.75% 1.5% 1% 0.5%
Profit before Tax 10%** 8% 7% 6% 5%
Total Assets 2% 1.75% 1.5% 1% 0.5%
Net Assets/Equity 10% 8% 7% 6% 5%
Net Current Assets 10% 8% 7% 6% 5%
 The benchmark percentage for Overall Materiality is based upon users’ needs and expectation
not and not taken from our formulated audit risk.

ENTITY TYPE
Section
For Profit Not for Profit Council
Revenue 50% 50% 50%
Profit before Tax 50% - -
Total Assets - 50% -
Net Assets/Equity - - -
Net Current Assets - - 50%
 Because SPSPS Solar Corporation is an entity incorporated for profit, hence, we use 50% on
Revenue and 50% on Profit before Tax.

OVERALL MATERIALITY

*REVENUE BASED = (575,034,036 X 50%)2%= 5,750,340

**PROFIT BEFORE TAX BASED = (431,646,833 X 50%)10%= 21,582,341

TOTAL OVERALL MATERIALITY 27,332,682

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PERFORMANCE MATERIALITY
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ENGAGEMENT RISKK Formatted: Font: Bold, Underline
LOW LOW TO MEDIUM MEDIUM MEDIUM TO HIGH HIGH Formatted: Font: 14 pt, Bold

90% 85% 80% 75% 70% Formatted: Font: 14 pt, Bold, Underline
 Performance Materiality as a % of Overall Materiality Formatted: Underline
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[(TOTAL OVERALL MATERIALITY) X 90%] = 27,332,682 X 90% Black
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= 24,599,414 PERFORMANCE MATERIALITY
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 We set a percentage of the Overall Materiality so as to allow us a margin for the possible Formatted ...
undetected misstatements that may occur during the engagement. This was based on
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engagement risk associated with the client.
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SPECIFIC MATERIALITY
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The following account balances were subject for specific materiality for it may be a high risk Formatted: Font: Bold
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 Related Party transaction and balances/Due from related parties (22%) Formatted: Font: Bold

 Trade and other receivables (15%) Formatted ...

 Property, Plant and Equipment (22%) Formatted: Font: Bold
 Accounts Payable (20%) Formatted ...
 Notes Payable (8%) Formatted: Font: Bold
 Due to related parties (3%) Formatted ...
 Sales Revenue (10%) Formatted: Font: Bold

Other items: Formatted ...

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• Disclosure of items such as those related to financial instrument risk
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 • Significant management estimates or valuations including sensitivity analysis
• Significant accounting policies or changes in accounting policies
• Sensitive income and expense accounts such as management fees and commissions
Percentages used in computing Specific Materiality were based on Performance Materiality.
Also on sensitive areas as a particular note disclosures as well as the nature of a potential
misstatement such as illegal act, non-compliance and statutory/regulatory reporting
requirements.

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