Qualitative factors can affect an auditor's assessment of materiality. Which of the following qualitative factors could influence the assessment of materiality?
I. Misstatements that are otherwise immaterial may be material if they affect earnings trends.
II. Minor misstatements resulting from the consequences of contractual obligations.
A) I only
B) II only
C) I and II
D) neither I nor II

Question

Quizplus · Accepted Answer

Both factors provided in the question can affect an auditor's assessment of materiality. The first factor states that misstatements that may not be material on their own can become material if they affect earnings trends, indicating the impact on user decisions. The second factor implies that misstatements resulting from the consequences of contractual obligations may also be material due to legal implications. Therefore, both factors should be considered in the assessment of materiality.

Qualitative Factors Can Affect an Auditor's Assessment of Materiality