When a client fails to follow GAAP, the audit can be unqualified, qualified, or adverse depending on the materiality. What factors affect materiality that an auditor should consider?
A) The dollar amount in comparison to a base.
B) If the misstatement can be measured.
C) The nature of the item.
D) All the above are factors an auditor should consider regarding materiality.

Question

Quizplus · Accepted Answer

All the above are factors that an auditor should consider regarding materiality. Materiality is based on the size or significance of a misstatement, and it is affected by factors such as the dollar amount in comparison to a base, whether the misstatement can be measured, and the nature of the item. Thus, all of these factors should be considered when making materiality judgments during an audit.

When a Client Fails to Follow GAAP, the Audit Can