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Qualitative Factors Can Affect an Auditor's Assessment of Materiality

question 97

Multiple Choice

Qualitative factors can affect an auditor's assessment of materiality. Which of the following statements is true?
I. Misstatements that are otherwise immaterial may be material if they affect earnings trends.
II. Misstatements that are otherwise minor may be material if there are possible consequences arising from contractual obligations.


Definitions:

Legal Advice

Guidance provided by a legally qualified person about the law or a specific legal situation, often involving interpretation of laws, regulations, and potential legal actions.

Initial Client Interview

The first meeting between a lawyer and a potential client where the lawyer evaluates the client’s case and discusses legal options.

Nonverbal Behaviors

Physical actions and cues that communicate messages without words, such as facial expressions, body language, and gestures.

Evidence Log

A detailed record keeping track of all evidence collected, handled, and presented in legal proceedings.

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