5 5 points eBook Print References Oldtown is a publicly traded real estate investment firm based in the Northeast. Incorporated 20 years ago, Oldtown's primary business is buying, developing, selling, and renting commercial real estate. Oldtown has been your firm's audit client for approximately 11 years, and this is the second year that you have been assigned to the engagement with overall responsibility for the internal control audit over financial reporting and the financial statement audit (i.e., the integrated audit). During the tests of internal controls over financial reporting, your team found a control deficiency related to the valuation of Oldtown's rental properties. Specifically, your team determined that the analyst responsible for performing the valuations had applied the incorrect interest rate in the discounted cash flow analyses that was used to value the rental properties. This error was not detected by the client and resulted in an overstatement of the property asset account in the year-end financial statements of $7.5 million. It is likely that any misstatement greater than this would have been detected by their compensating control, a monthly budget to actual analysis. The management team of Oldtown believes that these errors would have been caught before the financial statements were filed with the SEC. There were no other control deficiencies noted in the internal control audit. Required: a. Assume that overall materiality was $250 million for Oldtown, do you believe that Oldtown has a deficiency, a significant deficiency, or a material weakness? b. Assume that overall materiality was $10 million for Oldtown, do you believe that Oldtown has a deficiency, a significant deficiency, or a material weakness? c. Assume that overall materiality was $5 million for Oldtown, do you believe that Oldtown has a deficiency, a significant deficiency, or a material weakness? a. Assume that overall materiality was $250 million for Oldtown, do you believe that Oldtown has b. Assume that overall materiality was $10 million for Oldtown, do you believe that Oldtown has c. Assume that overall materiality was $5 million for Oldtown, do you believe that Oldtown has