Question 1
Auditing standards define ________ as the magnitude of misstatements that individually, or when aggregated with other misstatements, could reasonably be expected to influence the economic decisions of users made on the basis of the financial statements.
◦ fraud
◦ inherent risk
◦ materiality
◦ significant
Question 2
When dealing with materiality,
◦ if the client refuses to correct a material misstatement, the auditor is required to adjust the financial statements.
◦ management is responsible for determining whether financial statements are materially misstated.
◦ materiality must be determined as a percentage of sales.
◦ the auditor must bring any material misstatements to the client's attention.
