A1. For purposes of this standard, the terms listed below are defined as follows:
A2. Misstatement – A misstatement, if material individually or in combination with other misstatements, causes the financial statements not to be presented fairly in conformity with the applicable financial reporting framework.1/ A misstatement may relate to a difference between the amount, classification, presentation, or disclosure of a reported financial statement item and the amount, classification, presentation, or disclosure that should be reported in conformity with the applicable financial reporting framework. Misstatements can arise from error (i.e., unintentional misstatement) or fraud.2/
A3. Uncorrected misstatements – Misstatements, other than those that are clearly trivial, 3/ that management has not corrected.
1/The auditor should look to the requirements of the Securities and Exchange Commission for the company under audit with respect to the accounting principles applicable to that company.
2/Paragraph .02 of AU sec. 316 , Consideration of Fraud in a Financial Statement Audit.
3/Paragraph 10 of this standard states that, "[t]he auditor should accumulate misstatements identified during the audit, other than those that are clearly trivial."
