Question
The overall materiality set for the engagement is $9 million. The performance materiality is $5 million. Specific performance materiality is not used. Han is a
The overall materiality set for the engagement is $9 million. The performance materiality is $5 million. Specific performance materiality is not used. Han is a staff auditor on this engagement. There was one error found during the audit, the value of the error was $500,000. There were no other errors found. Han determined that this was an honest error it was a miscalculation by the controller, who simply did not do the math correctly. When Han brought it up, the controller agreed with Han and booked an adjusting entry to fix it. When Han explained this to the partner on your engagement, she said I am glad this error was fixed, because it would have been material. Han was very surprised to hear this, because the error looked clearly immaterial to her. Give two reasons how an error like this can be material
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started