Auditors must use their professional judgment _______.
A)to distinguish if a misstatement or scope limitation is just material or pervasively material
B)to distinguish if a misstatement or scope limitation is just immaterial or pervasively material
C)to determine if the firm has the ability to pay the auditor for services rendered
D)in selecting the client's audit committee

Question

Quizplus · Accepted Answer

Auditors must use their professional judgment to distinguish whether a misstatement (error) or scope limitation (restricted access to evidence) is material or pervasively material. Materiality refers to the significance of an amount or transaction as it impacts a user's judgment. Material errors or scope limitations could impact financial statements' relevance and reliability, posing risks for stakeholders. Therefore, auditors should report and deal with them properly.

Auditors Must Use Their Professional Judgment _______