Auditing procedures testing accounts receivable identified a known difference of $8,662 in the sample tested. Because this was identified with a sample, auditors must project or extrapolate this to the population. Calculate the best estimate of the actual difference in the population. What other things must the auditor consider in addition to the estimate you calculated? (8 pts)

EyeMax is engaged in research and development, manufacture, and sale of medical devices used by ophthalmologists during eye surgeries. Customers of the product lines are primarily doctors of ophthalmology and laser-eye clinics.Wayne Carruth, MD, founded the company in 1990 to produce and market a line of devices he designed for use in optic surgery. Several years ago, EyeMax began to exploit the future prospects of laser technology in optic surgery. EyeMax has grown rapidly, especially in recent years, and has made significant strides in market share. EyeMax is currently the third largest supplier of optical equipment, with a 25 percent market share, and employs 425 people, up from only 285 employees just two years ago. Thirty percent of the stock in EyeMax is owned by Wayne Carruth and his immediate family. An additional 40 percent of the stock is owned by company employees, with the largest individual holding equal to about ten percent of the company's shares.Venture capitalists and a few outside investors hold the remaining shares. The company's shares currently trade on the over-the-counter bulletin-board market.1 Accounting environment, risk assessments, and audit approach. The accounting department employs eight people with various backgrounds: the controller is a CPA, the accounting supervisor and payroll supervisor each have college degrees in business, and the remaining five clerks have limited training and experience. Although the company has no material weaknesses in internal controls, the accounting department has not kept pace with the demands created by growth in production and sales. The department is overworked. Key controls appear to be functioning but are not always performed on a timely basis. In the planning phase of the audit, both inherent risk and control risk were assessed at less than the maximum, but the audit plan specifies an audit approach that relies primarily on substantive testing. Management's position regarding audit adjustments. EyeMax has been an audit client for five years. Prior audits have generally detected accounting misstatements, and EyeMax's management has readily made the recommended adjustments. As the client has booked all identified prior-year differences, there are no "turn-around" effects to be considered from the prior year. However, in the past, audit reports have been dated before the end of February.This year, because of deadlines imposed by other clients and staffing problems at your audit firm, fieldwork at EyeMax was not completed by the end of February. Nonetheless, the president of EyeMax, without prior consultation with your firm, provided shareholders and creditors with preliminary earnings information in the last week of February. It is now the middle of March, and the president strongly prefers to minimize adjustments to the financial statements because he believes that such adjustments will unduly reduce shareholder and creditor confidence. In his opinion, no adjustment should be made unless it is absolutely essential for fair presentation.The managing partner of your office has been notified of the situation and the client's request. She has not yet reviewed the supporting detail presented below, but at this point she agrees that the audit team should not require adjustments be made unless the firm has no choice based on firm audit-practice standards. Materiality. For purposes of planning and conducting the audit, total overall financial statement materiality was set at $625,000. This amount is equal to approximately 5% of earnings before taxes. (Note that because materiality is stated on a before-tax basis, all of the information below is also presented on a before-tax basis.) Performance materiality is an amount less than overall materiality that auditors use to determine the nature, timing and extent of testing. Performance materiality for Eyemax is set to 75% of overall materiality. According to firm policy, tolerable misstatement for any one financial statement account cannot exceed performance materiality