What should the auditor issue if unadjusted errors are not material and the client does not adjust?

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Prepare for the AAT Level 4 External Auditing Test with interactive quizzes. Utilize multiple-choice questions with explanations to enhance your understanding and improve your chances of success.

Multiple Choice

What should the auditor issue if unadjusted errors are not material and the client does not adjust?

Explanation:
Materiality of misstatements drives the auditor’s opinion. If unadjusted errors are not material to the financial statements as a whole, the statements still present fairly in accordance with the applicable framework, and management’s decision not to adjust does not change the opinion. In this scenario, the auditor would issue an unmodified (unqualified) audit report because there are no material misstatements that would require a qualification or modification of the opinion. A modified opinion would be necessary only if the misstatements were material or pervasive, which is not the case here.

Materiality of misstatements drives the auditor’s opinion. If unadjusted errors are not material to the financial statements as a whole, the statements still present fairly in accordance with the applicable framework, and management’s decision not to adjust does not change the opinion. In this scenario, the auditor would issue an unmodified (unqualified) audit report because there are no material misstatements that would require a qualification or modification of the opinion. A modified opinion would be necessary only if the misstatements were material or pervasive, which is not the case here.

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