Explain How Auditors Decide Whether or Not a Misstatement They

question 82

Essay

Explain how auditors decide whether or not a misstatement they encounter in the financial report is material.For example, in auditing ZZZ Pty Ltd, it is discovered that stock is overstated by $300 000.Is this material?

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Definitions:

Decision-making Process

A series of steps that individuals or groups follow to evaluate options and choose from among alternatives for actions or resolutions.

Organizational Objectives

The specific, measurable goals that a company aims to achieve in order to fulfill its mission and drive its vision forward.

Overall Goals

General objectives that an organization or individual aims to achieve in the long term.