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You are auditing an online food delivery company and noted that the accountant wrongly charged an additional 1 percent to the commission fee on all
You are auditing an online food delivery company and noted that the accountant wrongly charged an additional 1 percent to the commission fee on all deliveries made on August 1. a. Is this error material? b. If the error occurred the entire month of August, is this error material? c. What if you discovered the CFO had deliberately increased the commission fee for the month of August in order to meet budget? a. Is this error material? O A. It is certain that 1 percent of commissions for one day is material. O B. It is likely that 1 percent of commissions for one day is material OC. It is certain that 1 percent of commissions for one day is immaterial. OD. It is likely that 1 percent of commissions for one day is immaterial. b. If the error occurred the entire month of August, is this error material? O A. The error has increased in size and its materiality depends on the percentage change in sales. OB. The error has decreased in size and its materiality depends on the percentage change in sales. O C. The error has increased in size and its materiality depends on the volume of sales. OD. The error has decreased in size and its materiality depends on the volume of sales. c. What if you discovered the CFO had deliberately increased the commission fee for the month of August in order to meet budget? A. The deliberate attempt to increase sales does not change the materiality of the error. B. The deliberate attempt to increase sales changes the nature of the error so that it would be considered immaterial (and is likely fraud as well). C. The deliberate attempt to increase sales changes the nature of the error so that it would be considered material (but is unlikely to be considered fraud) OD. The deliberate attempt to increase sales changes the nature of the error so that it would be considered material (and is likely fraud as well)
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