Question: please help for this test questionthanks Q1 (5 marks) You are auditing the loan receivable balance of XYZ Lid, a finance company engaged in providing

please help for this test questionthanks

please help for this test questionthanks Q1 (5 marks) You are auditing

Q1 (5 marks) You are auditing the loan receivable balance of XYZ Lid, a finance company engaged in providing short, medium and long term loans to individual customers for a range of purposes in Australia. The audit plan lists the following: Loan receivable balance as at 30 June 2020 = $13,650,000 Risk of material misstatement = high . Tolerable misstatement = $850,000 Expected misstatement = $136,500 Desired level of assurance = 90% Sampling method = Stratification with random selection within each stratum Based on the above information, using judgment, your audit junior divided the population into four stratums and determined the sample size. He presents the following results from the sample testing. Stratum Stratum Carrying Sample Audited (Balance due) amount value value $ $ $ $ 2000 225,000 7,215 7,065 2 > 2000 $ 10,000 650,000 24,400 22,345 3 > 10,000 s 4,450,000 786,200 720,200 100,000 4 > 100,000 8,325,000 5,135,325 4,905,325 TOTAL 13,650,000 5,953,140 5,654,935 Conclusion: Sample misstatement = $5,953,140 - $5,654,935 = $298,205. Projected misstatement = $(298,205/5,953,140)*13,650,000] = $683,757 . As the misstatements ($683,757) are less than the tolerable error ($850,000), the account is not materially misstated. Required: Do you agree with the work of the audit junior in relation to: (1) determination of the sample size of each stratum, (2) projection of the sample misstatements, and (3) the final conclusion? [Show your workings / calculations, where necessary. You are free to use an excel spreadsheet for computations. However, don't forget to incorporate your computations into your word document before submitting]

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