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The court case and its potential legal consequences are not material, being well below the materiality threshold of $1.5 million. The matter is certainly not fundamental to users’ understanding of the financial statements. Due to the immaterial nature of the matter it need not be referred to in the auditor’s report at all.
ma’am this is slightly silly; but I wanted to ask how does an auditor decide whether a matter is fundamental to users understating of FSs or not? is it dependent on criteria such as if it exceeds the materiality threshold or not?
Something fundamental must “at least” be material.
You might find this post helpful https://opentuition.com/topic/paddington-co
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