For the financial year $2023,$ the auditor of Beta Ltd sets Tolerable Error at $$12,000$ for inventory.

i$)$ The following details were used by the auditor to calculate the Projected Error.

ii$)$ The auditor concluded that since Error found in Stratum $1$ Sample is $$1,500,$ the overall Projected Error for all inventory based on STRATUM $1$ alone will be $$15,000$ and is shown below:

$1$

$,$

$500$

$50$

$,$

$000$

x$500,000=15,000$

Conclusion: The overall Projected Error breaches the Tolerable Error $($$$15,000>$ $$12,000).$ Hence material misstatement should exist.