University U grad is auditing Portland Mega Corp. and has set materiality at $1,000,000 and tolerable misstatment at $500,000. While performing audit procedures she discovers that current assets are overstated by $100,000. She also noted that Portland Mega Corp. is barely in compliance with their debt covenants, and correcting this misstatement would bring them out of compliance with the covenants.

University grad should determine that the misstatement is not material because it is below the tolerable misstatment she calculated during audit planning.

True

False