Question

For departures from GAAP or scope restrictions, the auditor must decide if the potential effect on the financial statements is?

1) immaterial.
2) material.
3) highly material.
4) any of the above.

Answer 1

The auditor must decide if the potential effect on the financial statements is material.

Step-by-step explanation:

For departures from GAAP or scope restrictions, the auditor must decide if the potential effect on the financial statements is material. This means that if the departure or restriction could have an impact on the overall accuracy and reliability of the financial statements, it is considered material.