Assume that you are auditing the inventory of Husky Manufacturing Company for the year ended December 31,

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Assume that you are auditing the inventory of Husky Manufacturing Company for the year ended December 31, 2013, and you are using MUS. The book value is $8,124,998.66. The risk of incorrect acceptance is 10% (90% confidence level). The tolerable misstatement is $275,000, and expected misstatement is $80,000, so the ratio of expected misstatement to tolerable misstatement is 29%. The ratio of tolerable misstatement to the population book value is 4.3%.

a. Calculate the sample size and the sampling interval.

b. Calculate the total estimated misstatement assuming the following misstatements were found in the sample:

Book Value Audit Value

$41,906.45 ....... $36,906.45

$335,643.28 .......$333,643.28

What conclusion do you reach based upon your calculation?


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Related Book For  answer-question

Auditing a risk based approach to conducting a quality audit

ISBN: 978-1133939153

9th edition

Authors: Karla Johnstone, Audrey Gramling, Larry Rittenberg

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