When a Client Fails to Follow GAAP, the Audit Can

question 21

Multiple Choice

When a client fails to follow GAAP, the audit 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.

---

Definitions:

Technical Skills

Abilities and knowledge in a specific field, particularly related to science, engineering, technology, or mechanics, often requiring specialized training.

Financial Stability

A state where the financial system, institutions, markets and infrastructure operate effectively and efficiently, withstanding shocks and avoiding crises.

Homogeneous

Composed of parts or elements that are all of the same kind; not heterogeneous or mixed.

Social Capital

Links among individuals in a particular society, aiding in the society's effective operation.