Question

AP10.8 (LO 8) Challenging Evaluating a PPS sample Assume the following misstatements were found in a PPS sample: Sample Item Book Value Audit Value $ 585 $ 650 540 1,900 2,200 1,650 2,800 2,660 Required a. Calculate the projected misstatement assuming: 1. The sampling interval was $1,800. 2. The sampling interval was $2,000.

Evaluating a PPS sample Assume the following misstatements were found in a PPS sample:

Sample Item Book Value Audit Value

1 $ 650 $    585      

2 540   0      

3 1,900 0      

4 2,200 1,650      

5 2,800 2,660      

a. Calculate the projected misstatement assuming:

• The sampling interval was $1,800.
• The sampling interval was $ 2,000.

Answer 1

Projected misstatement can be computed by deducting the audit value from the book value

1. The sample interval was $1,800

PPS misstatement = 1900+2200+2800-0-1650-2660

= $2,590

2. The sampling interval was $2,000

PPS misstatement = 2200+2800-1650-2660

= $690