If not adjusted, a situation in which the total likely misstatement in the financial statements exceeds a material amount is likely to lead to an audit report modification.

Question

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A situation where the total likely misstatement in the financial statements exceeds a material amount is considered a material misstatement. Material misstatement requires an audit report modification according to generally accepted auditing standards (GAAS). Therefore, if the misstatement is not adjusted, it will lead to an audit report modification.

If Not Adjusted, a Situation in Which the Total Likely