The auditor compares the individual and aggregate effect of uncorrected misstatements with materiality; if the total effect is material, the opinion may be modified. They are listed in the management representation letter and communicated to those charged with governance.
Source: BDS 450
Related terms
MaterialityA misstatement being large enough, individually or together with others, to influence the economic decisions of users of the financial statements.Management representation letterA letter in which management confirms in writing its responsibilities for the financial statements and the completeness of information provided to the auditor.Qualified opinionThe opinion the auditor expresses when misstatements, or a lack of evidence, are material but not pervasive.Adverse opinionThe opinion in which the auditor states that the financial statements are not presented fairly, where misstatements are both material and pervasive.Agreed-upon proceduresAn engagement in which the practitioner performs procedures agreed with the entity and, where relevant, a third party, and reports only the findings without providing assurance.Analytical proceduresThe evaluation of financial information through analysis of plausible relationships among financial and non-financial data.
Last updated: October 31, 2026 · This definition is for general information only.