Choose the quantitative factors that hep determine materiality from below.
Income before taxes
Income from continuing operations
3 year average income
total assets
total revenues
gross profit
potential for fraud or illegal acts
higher than normal risk of bankruptcy
potential loan covenant violations
The sum of the misstatements in financial statements can be more than the materiality threshold.
Which of the following would be an acceptable solution is the misstatement is greater than materiality?
Leave opinion as is.
Do not tell the client so they will not try to change anything in the financial statements
Do additional testing
Do take the financial risk of walking away from the audit.
SAS 84 requires which of the following?
Auditors on new engagements need to contact the preceding auditor, with permission from the potential client.
Auditors on new engagements need to contact the preceding auditor, whether the potential content likes it or not.
IT specialists are rarely needed for audit engagements.
