Which of the following statements regarding judgmental misstatements is incorrect?
A) They are the same as errors.
B) They can arise as a result of a difference in underlying assumptions by the client and the auditor.
C) They are not the same as errors.
D) They can arise as a result of a difference in the application of judgment by the client and the auditor.

Question

Quizplus · Accepted Answer

Judgmental misstatements are not the same as errors. While errors represent mistakes made in processing transactions or in applying accounting principles, judgmental misstatements are differences in judgments made by the auditor and the client. They can arise due to a difference in underlying assumptions or application of judgment. Therefore, option A is incorrect as it equates judgmental misstatements with errors.

Which of the Following Statements Regarding Judgmental Misstatements Is Incorrect