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When an audit goes about his business and finds misstatement but not material, the FS goes unmodified therefore no changes were made, what if the following year, what would have been an unmodified FS (little misstatements here and there but still not material), but if you have taken account of the previous years misstatement, combined, it would have caused the overall FS to contain material misstatement, whats would the outcome be?
The auditor would have to discuss it with management and let them know that the mistatements need to be corrected since the statements aren’t showing a true and fair value.
If they don’t correct it then the auditor would qualify his audit report explaining the compounded mistatement
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