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Hi
I would like to know what type of misstatement is the one at financial statement level?
In practical terms what would financial stats. need to miss or omit for the auditor to say that they do contain material misstatement at the financial stat. level?
Can statement contain misstatement at Financial level but not at the assertion level?
I understand how misstatement can happen at assertion level, classes of transactions , etc….
Thank you
Record a transaction as $100,000 instead of $1,000,000 will probably give rise to a material misstatement at the financial statement level!
But if i record such transaction then would it not be material misstatement at level of assertion about classes of transaction then?
Thank you
Hi again
You’re right of course!
However, here’s an extract from an article in Student Accountant March 2012
“A simple example is that a company may face a business risk such as a fall in demand for its products. The associated risk of material misstatement lies in the valuation of inventory therefore there is a risk of misstatement at the assertion level. However, the fall in demand could also have a longer-term impact on the company’s going concern status, leading to a potential risk of misstatement at the financial statement level. Appendix 2 of ISA 315 contains a useful list of examples of conditions and events that may indicate risks of material misstatement.”
and here’s the link to the article itself!
https://www.accaglobal.com/uk/en/discover/cpd-articles/audit-assurance/material-misstatement.html
Post again if you’re no clearer
Thank you
The article helped out to clear some other queries also
more reading and going through past papers should help as well as I only started preparing for P7I was thinking that for example if an entity did not recognize a provision that is material, would that then be risk of misstatement at the financial statement level?
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