When a Client Fails to Follow GAAP, the Audit Report

question 5

Multiple Choice

When a client fails to follow GAAP, the audit report can be unqualified, qualified, or adverse depending on the materiality.What factors affect materiality that an auditor should consider?

• A)The dollar amount in comparison to a base
• B)If the misstatement can be measured
• C)The nature of the item
• D)All the above are factors an auditor should consider regarding materiality.

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Definitions:

Real GDP

Gross Domestic Product adjusted for inflation, representing the value of all goods and services produced over a specific time period in real terms.

Inflation Rates

The percentage rate at which the general level of prices for goods and services is rising, and subsequently, purchasing power is falling.

Unemployed Classification

A categorization for individuals who are without a job but are available to work and have actively sought employment within a specific timeframe.

Voluntary Reasons

Motives or causes that lead individuals to make choices freely without external coercion, often influencing personal and economic decisions.