LO: student will be able to assess the risks of material misstatements in the financialstatements and consider the impact on the audit strategyISA 320 Materiality in planning and performing an audit"Misstatements, including omissions, are considered to be material if they, individually or inthe aggregate, could reasonably be expected to influence the economic decisions of userstaken on the basis of the financial statements"

Case Study:

PT Loss or Profit (PT RL)PT RL, suffered losses in 2017 and 2018, so the Retained EarningsEarnings) as of December 31, 2018 was only US$ 20,000. For 2019 PT RLearned a profit before tax of US$ 15,000.You are auditing PT RL's financial statements for the year ended 31December 2019, the materiality rate calculated is US$50,000. It meansyou as the auditor of PT RL, will accept errors both individual and aggregate amountconsidered immaterial if the amount is below US$ 50,000.For the audit of the 2019 financial statements, there was only one error, where PT RLforgot to accrue 2019 expenses of US$ 30,000. Actually based onThis quantitative approach to error is immaterial as it is still below US$50,000.

Requested:Determine using your professional judgment, whether the mistake was due to forgettingrecording an accrual of US$30,000 would result in a material misstatement of the statementsPT RL's financial year 2019 or not?