1. Should auditors insist that their clients accept all proposed audit adjustments, even those that have an “immaterial” effect on the given financial statements? Defend your answer.

The issue of materiality governs this topic of whether the auditor should insist on their clients accepting the proposed audit adjustments. If the auditor comes to the conclusion after gathering his or her evidence, that the errors cause a material misstatement to the clients financial statements then of course an adjustment is required. However, in the case in which the effects of such misstatements are immaterial to the financial statements, then no adjustment must be required- often relieving the auditors from conducting such work that is nuisant and having to debate with the clients as to why such insignificant adjustments need be made. Then again the auditors need to very aware that a material misstatement may well still be possible and therefore need to critically evaluate their results.

2. Should auditors take explicit measures to prevent their clients from discovering or becoming aware of the materiality thresholds used on individual audit engagements? Would it be feasible for auditors to conceal this information from their audit clients?

Absolutely, auditors should do their utmost in concealing such critical audit aspects as that of materiality thresholds because they can very well jeopardize the genuinity and conclusion of the audit engagement as was evident in the case. Of course, it is nearly impossible to eliminate such doubt because of the fact there is so much interaction between the client and the auditors, whether it be handle inquiries or prepare documents. Clients can very use such interaction to their advantage and develop a sense as to how the auditors work and what accounts they will look into. The cost benefit analysis would come into play