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Hi. Good day.
I understand that audit adjustment should only be performed for a material amount, which exceeds the Overall Materiality threshold.
Please may I know how about Performance Materiality? If a misstated figure has exceeded the Performance Materiality threshold, should an audit adjustment be performed?
For a misstated figure which is lower than Performance Materiality (which is definitely lower than the Overall Materiality), no audit adjustment is needed?
Thank you.
During the audit, the auditor will collate all actual and potential misstatement on an error schedule.
By definition, a misstatement that exceeds overall materiality “OM” must be corrected… to avoid modification of the audit opinion.
If the aggregate of uncorrected misstatements exceeds OM, some corrections will be necessary to reduce the aggregate to less than OM. The auditor would start by asking management to correct “factual” errors – about which there should be no argument, before looking at misstatements that might be regarded as a matter of judgement.
Oh I see..
Please may I know in what level auditors can stop correcting errors? When the misstated figures are lower than Performance Materiality, or something else?
Thank you.
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