Question

Edwards has decided to use monetary- unit sampling in the audit of an entity’s accounts receivable balance. Few, if any, misstatements of account balance overstatement are expected.

Required:
a. Identify the advantages of using monetary- unit sampling over classical variables sampling.
b. Calculate the sample size and the sampling interval Edwards should use for the following information:
Tolerable misstatement .......... $ 15,000
Expected misstatement .......... $ 6,000
Desired confidence level ........... 95%
Recorded amount of accounts receivable ... $ 300,000

c. Calculate the UML assuming that the following three misstatements were discovered in an MUSsample.


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  • CreatedSeptember 22, 2014
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