When expressing an unqualified opinion, the auditor who evaluates the audit findings should be satisfied that the:
A) amount of known misstatement is documented in the management representation letter.
B) estimate of the total known and likely misstatements is less than a material amount.
C) estimate of the total likely misstatement includes sample error.
D) amount of known misstatement is acknowledged and recorded by the client.

Question

Quizplus · Accepted Answer

When expressing an unqualified opinion, the auditor should be satisfied that all known and likely misstatements are less than a material amount. This includes estimates of misstatements, not just known misstatements. The management representation letter may document known misstatements, but it is not sufficient to evaluate the overall materiality of misstatements. Including sample error in the estimate of likely misstatement would be inaccurate and potentially result in a higher materiality threshold. Acknowledgment and recording of known misstatements by the client is important, but not sufficient to evaluate the overall materiality of misstatements.

When Expressing an Unqualified Opinion, the Auditor Who Evaluates the Audit