Question

15 Assume that you have selected the following nonstatistical sample for selecting accounts receivable for confirmation. The total book value of the population is $9,000,000, and tolerable misstatement is $350,000. You have decided to audit every item over $50,000 and randomly select items in two groups under $50,000, as the following shows. You selected the following sample. Stratum N n a) >$50,000 b) 50,000>X>4,999 c) <5,000 20 100 300 20 30 30 Book Value of Stratum $3,000,000 3,000,000 3,000,000 9,000,000 Book Value of Sample $3,000,000 1,000,000 300,000 4,300,000 Audit Value of Sample $2,948,000 970,000 280,250 4,198,250 Required. 1) Determine the estimated audited value of the population using non-statistical ratio analysis. Stratum Sample Sample Book Value Audit Value Overstatement % BV Stratum Projected Misstatement a b с Total Projected Misstatement 2) What audit conclusion can you draw based on the evidence above?

Answer 1

Answer stratum/population Sample Book size 57 vale Sample book role Audited estimated Book val Audit Value 30,00 to 30,09 000 Above 50,000 2948000 294&copoocoon ресс 2948000 Below 50000 IOD Bo 3000000 1000000 970000 1970000 "B00D DOO TOOD DOO -2910000 Above 5000 800 30 Below 5000 30 00000 300000 280250280250% 1800లయం = 280 2500 Total 8660500 1.] Estimated Audit value $8660500 Miss statement - 9000 000 - 8660500 339500. 2] Misstatement is within the tolerable limit.