Question

E-Lotions.com, Inc., is an online retailer of body lotions and other bath and body supplies. The company records revenues at the time customer orders are placed on the​ website, rather than when the goods are​ shipped, which is usually two days after the order is placed. The auditor determined that the amount of orders placed but not shipped as of the balance sheet date is not material.

a. State the condition (either change in accounting principle, failure to follow GAAP, none, reporting involving other auditors, or scope of the audit has been restricted)

b. State the materiality level (either Material, immaterial, highly material, material or highly material, or not applicable)

c. List any additional information needed (either amount of loss, auditor's preliminary judgement, client explanation in a memo, or the size of the misstatement

Answer 1

a. The condition here is none, the auditors uses his professional judgement and determines that  the amount of order placed but not shipped as of the balance sheet date is not material.

b. The materiality level is Immaterial.  As the auditors by using his professional judgement feels that the amount of order placed but not shipped as of the balance sheet date is not material.

c. The additional information needed may be amount of loss by order placed but not shipped