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My question is from Rose (Dec 12 amended)
I can not understand the phrase in the answer which states:
“Ask the management about the action they have taken to establish the value of the misstatement of trade payables. If they have ascertained the value of the error assess the materiality of it and the impact of it remaining uncorrected.”
Why would an auditor need to assess the materiality of error and its impact if it remains uncorrected?
Thank you!
See auditor’s responsibilities on page 30 of our notes:
“The auditors’ responsibilities are to obtain reasonable assurance about whether the financial
statements as a whole are FREE FROM MATERIAL MISSTATEMENT, whether due to fraud or error, and to issue an auditor’s report that includes their opinion.” – this is reiterated in the Illustrative example on page 32.See on page 35:
“All misstatements identified should be communicated to management who should be asked to
correct them or to explain why not. The auditors must assess the materiality of uncorrected
statements ….”If there are material uncorrected misstatements the audit opinion must be modified – most likely qualified – see the matrix on page 41.
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