You are auditing a sporting goods company with $$44\mathrm{.}5$ million of pre$-$tax income and $$76$ million in total assets. Materiality has been

determined to be $5\%$ of pre$-$tax income and tolerable misstatement is $50\%$ of materiality. The accounting firm does perform

auditing procedures on all items above tolerable misstatement, but does not have a specific policy requiring unrecorded

misstatements to be booked that fall below the materiality threshold.

If the total of all unrecorded misstatements adds up to a $$1,500,000$ overstatement of revenues and assets, would this firm issue an

unqualified opinion?

Yes

No