Misstatements are identified as the reported disclosures of an organisation failing to meet the financial reporting framework. Misstatements usually arise from errors or frauds.
The ISA 450 Evaluation of Misstatements Identified During the Audit, states what how to identify and deal with misstatements of financial accounts and the auditors responsibility in relation to misstatements.
There are three types of misstatements namely:
- Factual Misstatement
- Judgemental Misstatement
- Projected Misstatement