You have just completed all audit testing and are now in the completion stage of the audit for a client with a December 31, 2021, year-end. The audit partner has asked you to compile the Summary of Identified Misstatements (SIM) from the information in the file. The client has not yet been asked to adjust any identified errors. Materiality for the engagement is $150,000. The clearly less than trivial amount was set at 4% of materiality. Performance materiality is 75% of materiality, and tolerable error is 5% of materiality.

• When performing a test on a sample of revenue transactions, it was determined that revenue was overstated by $100,000 because of revenue being recognized in the wrong period. The test resulted in a total known and projected error of $127,500.
• It was determined that a $2,000 invoice for goods shipped on December 30, 2021 FOB shipping point had not been included sales or accounts receivable
• During the audit of property, plant, and equipment, it was determined that a $30,000 invoice for painting the warehouse was capitalized when it did not meet the criteria for being a betterment.

Required (7 marks)

1. For each of the above situations indicate whether it is a misstatement that should be included in the SIM and why (3 marks)
2. For those adjustments that should be included enter them into the following table and determine the total amount of the unadjusted identified misstatements. (2 marks)

Description	Assets	Liabilities	Pre-tax Income
Total uncorrected misstatements

Note this table can either be copied and pasted into your answer box or you can create your own table. If you have any difficulties with this, just answer the question in the way that is easiest for you.

3. Indicate what conclusion can be reached about the preliminary unadjusted identified misstatements and how they will affect the audit opinion if management chooses not to adjust. Indicate the specific type of audit opinion that would be given and why (2 marks)