Question

An auditor has set the materiality level for the financial statements as a whole at $125,000. Which of the following misstatements would the auditor most likely consider material? The client misclassified $42,000 of supplies expense as miscellaneous expense. The client did not record $47,000 in trade accounts payable at year end. The client did not disclose $45,000 of related party transactions in the footnotes. The client’s estimate of the allowance for doubtful accounts is $40,000 more than the auditor’s estimate.

          An auditor has set the materiality level for the financial statements as a whole at $125,000. Which of the following misstatements would the auditor most likely consider material?
The client misclassified $42,000 of supplies expense as miscellaneous expense.
The client did not record $47,000 in trade accounts payable at year end.
The client did not disclose $45,000 of related party transactions in the footnotes.
The client’s estimate of the allowance for doubtful accounts is $40,000 more than the auditor’s estimate.

Added by Michelle C.

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