Case Study on Identified Misstatements and their Effect on Audit Materiality and the Independent Auditor’s Opinion

Author:Univ. Prof. Horia NEAMŢU, Ph.D., Urania MOLDOVANU

JEL:M 42

DOI:

Keywords:financial audit, audit engagement, materiality, audit risk, misstatements, errors

Abstract:
Starting from the theoretical approach of the subject and taking into account the regulations imposed by the International Standards on Auditing, this work presents the readers a case study that may guide the auditor on the practical measures related to the documentations of sections B5 Materiality, A9 Summary of errors and A14 Audit Report in the „Guidance on Quality Audit”, prepared by the Institute of Chartered Accountants of Scotland (ICAS) and used by financial auditors, CAFR members, by means of the authorized translation performed by the Chamber of Financial Auditors of Romania.\r\n\r\nComments related to this subject were prepared by a critical analysis of the specialized, as well as based on the authors’ professional experience. Thus, the concept of materiality is being analyzed both in the context of preparing and disclosing financial statements, as well as in the context of an audit. Also, in what regards materiality, audit risk is being debated. \r\n\r\nIn this article, references are made to the materiality determination when planning an audit, namely functional materiality, materiality review while audit progresses, communication and correctness of errors and, finally, assessment of uncorrected misstatements.\r\n\r\nIt was in this context that the case study was built, having a practical value for planning and performing audit engagements.\r\n

---