Question

When issuing unqualified opinion, the auditor who evaluates the audit findings should be satisfied that the ___________________.

• A. Amount of known misstatement is documented in working papers
• B. Estimates of the total likely misstatement is less than materiality level
• C. Estimate of the total likely misstatement is more than materiality level
• D. Estimates of the total likely misstatement cannot be made

Answer 1

The correct option is B Estimates of the total likely misstatement is less than materiality level

A maximum materiality level set by the auditor is a tolerable level upto which misstatements are acceptable; beyond which it needs to be brought to the notice of shareholders and other stakeholders.

Hence, if is within the acceptable limit, auditor shall release an unqualified opinion i.e a clean report.