ACCA Audit and Assurance (F8) Practice Exam

How should the auditor address uncorrected misstatements that are deemed immaterial?

1. Ignore them

2. Document them for future reference

3. Obtain written representation confirming their immaterial nature

4. Report them to regulatory bodies

The correct answer is: Obtain written representation confirming their immaterial nature

In the context of audit practice, addressing uncorrected misstatements that are considered immaterial involves ensuring that the financial statements present a true and fair view without the errors undermining their reliability. Obtaining written representation from management confirms their understanding and acknowledgment of the misstatements' immaterial nature. This step underscores the importance of documenting the auditor's judgments and the rationale for not making corrections, thereby providing clarity on the matter for both current and future audits. The representation serves as evidence that management has engaged with the auditor's findings and agrees on their immaterial impact, thereby mitigating potential disputes regarding the misstatements later on. This aligns with the fundamental auditing principles of transparency and accountability. Other options would not appropriately address the issue at hand. Ignoring uncorrected misstatements does not uphold the accountability standards required in audit practice. Documenting them for future reference is generally good practice; however, without confirmation from management, the contextual integrity of these misstatements may be questioned. Reporting them to regulatory bodies may be necessary for material misstatements, but for those deemed immaterial, this step is excessive and not aligned with standard auditing procedures. Therefore, obtaining written representation is the most suitable and effective strategy in managing the situation.