Question

can you give me 3 examples of a material misstatement ?

Answer 1

An item is said to be material when it affects the decision of users of financial statements.

The 3 examples of a material misstatements are as follows:-

1.) Due to Fraud & Error of Employees & Management.

2.) Unusual Transactions & Conditions at Year End.

3.) IT Related Risk & Integrity Issues.

4.) Collusion of Employees

5.) Single Person Handling Cash.

6.) Business & Significant Risk

7.) Certain accounts, classes of transactions, and assertions that have high inherent risk because they involve a high degree of management judgment and subjectivity

8.) in the case of a larger entity, there may be a risk of improper conduct by management, such as the effectiveness of the audit committee and the internal audit function, and the existence and enforcement of a formal code of conduct.

9.) Fraudulent financial reporting and misappropriation of assets

10.) Operating personnel not directly involved in the financial reporting process