This question is from: Textbook: Principles of Auditing and Other


Question Description:

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This question is from: Textbook: Principles of Auditing and Other Assurance Services: 18th Edition Authors: Ray Whittington and Kurt Pany ISBN-13: 978-0078111037 ISBN-10: 007811103X This is question is 9A-11 from the chapter 9 appendix. For the below problem I just need help finding the answers to part D & E. I provided the whole problem just to give you the full picture. Thank you so much! Question 9A-11 The auditors wish to test the valuation of accounts receivable in the audit of Desert Enterprises of Bullhead City. The client has $500,000 of total recorded receivables, composed of 850 accounts. The auditors have determined the following: Tolerable misstatement: $25,000 Risk of incorrect acceptance: 5% Expected misstatement: $2,000 The auditors have decided to use probability-proportional-to-size sampling. Required: a. For planning the sample, calculate: 1. Required Sample Size 2. Sampling Interval b. Assume that the auditors have tested the sample and discovered three misstatements: Book Value Adjusted Value $50 $47 800 760 8,500 8,100 (1) Projected misstatement (2) Basic precision (3) Incremental allowance (4) Upper limit on misstatement c. Explain how the auditors would consider the results calculated in (b). D. CALCULATE THE REQUIRED SAMPLE SIZE AND SAMPLING INTERVAL E. ASSUME THE AUDITORS HAVE TESTED THE SAMPLE AND DISCOVERED FIVE MISSTATEMENTS: BOOK VALUE AUDITED VAULE $50 $47 300 325 800 760 912 867 8,500 8,100 CALCULATE PPS RESULTS

Answer

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