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Auto Delivery Company has a fleet of several delivery trucks. In the past, Auto Delivery had followed the policy of purchasing all equipment. In the current year they decided to lease the trucks. The method of accounting for the trucks is therefore changed to lease capitalization. This change in policy is fully disclosed in footnotes.
For this situation
a. Identify if the condition requires a modification of or a deviation from an unqualified standard report.
b. State the level of materiality as immaterial, material, or highly material. If you cannot decide the level of materiality, sate the additional information needed to make a decision.
c. Given your answers in parts a and b, state the type of audit report that should be issued. If you have not decided on one level of materiality in part b, state the appropriate report for each alternative materiality level.
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