Undetected Misstatements in Auditing: Quantitative Factors & Misstatement Review

When considering the possibility of undetected misstatements in an audit, step 2 involves analyzing quantitative factors. This helps determine if the total misstatements found approach the materiality threshold set during audit planning.

But which misstatements are specifically reviewed in this step?

• A Uncorrected misstatements: While important, focusing only on these offers an incomplete picture. * B Corrected misstatements: These provide context but don't represent the final risk assessment.* C Projected misstatements: These are crucial for estimating potential misstatement but are not the sole focus in this step. * D Corrected and uncorrected misstatements: This is the correct answer. Reviewing both provides a comprehensive view of identified misstatements and their potential impact on the audit.

By considering both corrected and uncorrected misstatements, auditors gain a thorough understanding of the overall misstatement risk and its proximity to materiality levels. This analysis contributes to a well-informed audit opinion.