Question 9

An amount that is clearly inconsequential relative to overall materiality, when taken individually or in aggregate and whether judged by any criteria of size, nature and circumstances.

a. Must be proposed to the client for adjustment in the financial statements

b. Must be passed along to the audit committee if not adjusted in the financial statements.

c. May be ignored by the auditor.

d. Must be aggregated with other misstatements to determine how it affects materiality.

Question 10

Included in the auditors evaluation of inherent risk is business risk. When business risk is high, the auditor may be concerned about what?

I.	The organization may be unable to operate effectively and profitably.
II.	The organization may lack effective internal controls over financial reporting.
III.	The organization may not have effective monitoring controls.
IV.	The organization may be too risky to accept as an audit client.