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Sir, I got a question related to materiality in part A. Preliminary materiality was set at 25k. And also there was a misstatement of 12k which was uncorrected. The question asked was to select two correct statements in relation to a misstatement of 15k.
I can remember I picked
1. This misstatement is not material therefore adjustment is not required
2. Opinion will not be modifiedDo we have to consider materiality in aggregate if they don’t tell specifically?
And
“misstatement is not material therefore adjustment is not required” is that statement correct in general?It is a problem for me to respond on the recollection of information rather than what is published as I cannot know what exactly is the context of the scenario (which is all important when answering OT-case questions).
If materiality is $25k and there is already $12k uncorrected misstatement which affects, say, total assets and profit, then a further misstatement of $15k that also affects total assets and profit – though not individually material, would “trigger” a total of uncorrected misstatements. Therefore, if management does not adjust the financial statements for either of the misstatement – the audit opinion should be qualified.
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