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Acc 450 the auditors should confirm accounts receivable unless the auditors’ assessment of the risk of material misstatement is low "and relying on confirmations would be futile if accounts receivable were relevant."
<h3>What is
material misstatement?</h3>
A major misrepresentation is material in the financial information that is sufficiently false to have an effect on someone who relies on those statements in making financial decisions.
Some characteristics of material misstatement are-
- For instance, a major misstatement of revenue may prompt a decision to purchase stock in a company, which could result in losses for the investor if indeed the misstatement is quickly corrected and the stock price drops.
- When management fails to correct a substantial misstatement that is discovered by an auditor, the auditor should assess the impact of the error mostly on financial statements & determine whether to revise the audit opinion.
- Shareholders in corporations that must comply with Securities and Exchange Act in 1934, newly amended, reporting obligations are exempt from this regulation.
To know more about the material misstatement, here
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<span>Elaborative rehearsal refers to the process of remembering
new information by linking it to previously learned information and making it meaningful in some way. </span>
<span>Using the mnemonic device “My Very Educated Mother Just Served Us Noodles” to recall the planets of the solar
system (Mars, Venus, Earth, Jupiter, Saturn, Uranus and Neptune) by taking the
first letter of each planet is an example of elaborative rehearsal. By linking the list of planets to other previously known
information, one is more likely to remember the list of planets.
Similarly, associating a newly met person's features with a previously known person's (your best friend's) features is an instance of elaborative rehearsal. </span>
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