a. Analysis: Determine an appropriate risk of incorrect acceptance for each population. b. Determine sample size: Calculate
Question:
a. Analysis: Determine an appropriate risk of incorrect acceptance for each population.
b. Determine sample size: Calculate sample size in each of the plans. Show computations.
Data relative to three MPU sampling plans are presented below.
Transcribed Image Text:
3 Tolerable misstatement $110,000 5,000 $140,000 $170,000 Size of population Risk of incorrect rejection Estimated population standard deviation Risks that misstatements accumulating to greater than tolerable misstatements will not be detected by: Internal control Analytical and other substantive procedures (excluding this test of details) Desired overall audit risk Inherent risk 6,000 8,000 10% 5% 10% $80 $105 $125 50% 40% 40% 50% 25% 85% 5% 5% 5% 100% 100% 100%
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a Using the formula RIA AR IR x CR x APR where RIA Risk of Incorrec...View the full answer
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Related Book For
Auditing A Practical Approach with Data Analytics
ISBN: 978-1119401742
1st edition
Authors: Raymond N. Johnson, Laura Davis Wiley, Robyn Moroney, Fiona Campbell, Jane Hamilton
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