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Material misstatements (Steps to be taken) (Communicate individual &…
Material misstatements
(Steps to be taken)
Identify
Accumulate these misstatements
Determine
clearly trivial
Evaluate effect
a. Distinguish
Factual
Judgemental
Projected
b. Overall audit strategy & plan be revised?
take into account
NATURE - qualitative
AMOUNT - quantitative
consider
materiality revised
effect of undetected misstatements
c. Request management to examine cause, & make adjustments where needed
perform additional audit procedures
Communicate with management & do the following
reasons & effect if no adjustment
distinguish between judgemental/factual/projected
effect on fair rep of AFS
Evaluate effect of uncorrected on AFS
reassessing materiality
consider size & nature of
UCM
(for individual + aggregate)
Communicate individual & total of
UCM
to
TCWG
consider effect on audit report
request relevant people to correct misstatement
consider effect of
UCM
on future audit involvement
communicate effect of prior yr
UCM
request management rep letter ~ that UCM are immaterial
Abbreviations used
UCM
= uncorrected misstatement
TCWG
= those charged with governance
Document the following in audit documentation
clearly trivial
accumulated misstatement & whether corrected
conclusion on UCM