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Explain how materiality differs for failure to follow GAAP and for lack of independence. Question content area bottom Part 1 A . Materiality for lack
Explain how materiality differs for failure to follow GAAP and for lack of independence.
Question content area bottom
Part
A
Materiality for lack of independence in audit reporting is easiest to define. If the auditor lacks independence as defined by the AICPA Code of Professional Conduct it is always considered highly material and therefore a disclaimer of opinion is always necessary. That is either the CPA is independent or not independent. For failure to follow GAAP, there are three levels of materiality: immaterial, material, and highly material.
B
Materiality for lack of independence in audit reporting is hardest to define. If the auditor lacks independence as defined by the AICPA Code of Professional Conduct there are three levels of materiality: immaterial, material, and highly material. For failure to follow GAAP, the level of materiality does not matter and therefore a disclaimer of opinion is always necessary.
C
For materiality for lack of independence, if the auditor lacks independence as defined by the AICPA Code of Professional Conduct it is always considered highly material and therefore a disclaimer of opinion is always necessary. For failure to follow GAAP, there are two levels of materiality: material and highly material. Therefore only a qualified opinion is necessary.
D
None of the above.
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