Module $4$ Hands on Case

Instructions: Using the Module $4$ Template provided, solve the two following problems. In order

to receive partial credit, use formulas wherever possible. Save your file as

"Module$\_4\_$LastName$\_$FirstName.xls$."$ Upload the final version of your file for grading.

Non$-$statistical Problem

You work for a top$-$notch audit firm, Foreman & Griswold LLP$.$ You have been assigned to audit

inventory at FMG Sporting Goods. Due to the composition of the account, you have decided to

audit the balance using non$-$statistical sampling methods. The account balance is $$13,270,000$ and is

comprised of $1,475$ items. The account balance has been segregated into the following strata:

Based on the results of the tests of controls and risk assessment procedures, the risk of

material misstatement has been assessed as moderate

The desired confidence level is moderate

The tolerable misstatement allocated to inventory is $$400,000,$ and the expected

misstatement is $$150,000$

The auditor plans to test $100\%$ of the items from the top stratum $($items $>$$$100,000)$

a$.$ Calculate the sample size

b$.$ You have identified the following errors during your testing. Use the ratio projection

method of evaluation to calculate the projected misstatement.

c$.$ After assessing the test results, what is your conclusion?