[Anonymous]

For this question, assume materiality is $50,000 and you found $20,000 worth of misstatements.

Are auditors supposed to report immaterial misstatements to the audit committee?

If no, then they are not likely to adjust the books to make corrections, over time such immaterial misstatements become material cumulatively.

If yes and management does not make the adjustments, are we supposed to make an unqualified report and include the immaterial misstatements in the report somewhere?

[Phllop]

You should inform management but they don't need to adjust the F/S. Also all uncorrected misstatements must be documented. I don't think you need to inform the audit committee (not sure).

You will never qualify a report for an immaterial misstatement — it's immaterial.

“If no, then they are not likely to adjust the books to make corrections, over time such immaterial misstatements become material cumulatively.”

Well yes overtime they may become material, but until that point they are still considered immaterial. When/if they become material in the future, then you would qualify/adverse, etc.

REG: 85
AUD: 74, 85
FAR: 74 (sigh)
BEC: 80 (don't even ask me how)

When I say C-P you say 'Ayyyyy show me the money'
-PO

[Author]

Replies