CPA · Question 27 · Area I: Ethics & General Principles
Scenario: During the audit of a nonissuer, the auditor identifies a material misstatement in the financial statements. Management corrects the misstatement. The auditor concludes that the misstatement was an isolated error and not indicative of a material weakness in internal control. <br/><br/>Does the auditor need to communicate this to those charged with governance?
Answer options:
No, because the misstatement was corrected.
No, because it was not a material weakness.
Yes, the auditor must communicate material, corrected misstatements.
Yes, but only if the misstatement involved fraud.
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