When accumulating misstatements under ISA 450, what type of judgments does the auditor encounter?

When accumulating misstatements under ISA 450, the auditor specifically encounters both factual and judgemental misstatements, making this answer the most accurate choice.

Factual misstatements are instances where the information is incorrect based on unequivocal evidence, such as mathematical errors or inaccuracies in amounts. For example, if an auditor finds that a recorded revenue figure contains a typographical error leading to an overstated income, this constitutes a factual misstatement.

Judgemental misstatements occur when there are differences in estimates or judgments made by management that could provide misleading financial reporting. These may arise from subjective decisions in areas such as asset valuation or accounting estimates, where management has exercised discretion. For instance, if management has estimated an asset's useful life based on overly optimistic assumptions, this leads to potential misstatements that require the auditor’s professional judgement to assess.

The ability to recognize and accumulate these types of misstatements is crucial so that the auditor can determine the overall impact on the financial statements and ensure they adhere to the applicable financial reporting framework. Hence, considering both factual and judgemental misstatements provides a comprehensive view of misstatements that could affect the audit outcome.