ACC Auditing Standards Question

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Business Finance

Question Description

Describe one of the auditing standards. What is interesting or surprising about it?

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Explanation & Answer

I will describe AS no. 13. The auditor's response to the risk of material misstatement. 
There are three kinds of misstatements described in this standard. Material, Immaterial and Pervasive.
If there is a misstatement of 0-5% of profit in Financial statements, it is called immaterial misstatement, in this case auditor expresses unmodified opinion in report that F/s give true and fair view. 
If there is a misstatement of 5%-50% in F/S,  it is called material misstatement, in this case auditor expresses qualified opinion in audit report that F/S give true and fair view except mentioned assertions. 
If there is a misstatement of 50% above of profit, it is called Pervasive. In this case auditor express adverse opinion or disclaimer of opninion that I do not express an opinion on f/s, 

NoqhyZhdrrg1 (2273)
University of Maryland

Really useful study material!