The dollar amount of some misstatements cannot be accurately measured.For example, if the client were unwilling to disclose an existing legal action, the auditor must estimate its effect on:
A) the auditor's exposure to lawsuits.
B) users of the financial report.
C) management's future decisions.
D) net income.

Question

Quizplus · Accepted Answer

The misstatement relating to the existing legal action that the client is unwilling to disclose can have an impact on the financial report users, as they may not be aware of the potential liabilities arising from the legal action. Hence, the auditor must estimate its effect on the financial report users. The misstatement does not directly impact the auditor's exposure to lawsuits, management's future decisions, or net income, and hence options A, C, and D are not relevant in this context.

The Dollar Amount of Some Misstatements Cannot Be Accurately Measured