The results of substantive testing of purchase invoices for Gamma Omega Co. are shown below. The five
Question:
The results of substantive testing of purchase invoices for Gamma Omega Co. are shown below. The five strata correspond to different departments and materiality allocated to the accounts payable is $15,000. Calculate the total projected error to the nearest dollar. Show all calculations. What would be the auditor’s conclusion about the population based on these results?
Stratum | Recorded Value | Audited Value | Sample Total Value | Stratum Total Value | Projected Error |
1 | $10,281 | $10,078 | $130,689 | $250,000 | ? |
2 | $8,429 | $11,813 | $32,766 | $120,000 | ? |
3 | $7,999 | $12,452 | $140,451 | $190,000 | ? |
| 4 | $5,289 | $4,345 | $64,719 | $170,000 | ? |
| 5 | $17,543 | 18,564 | $122,005 | $160,000 | |
Total | $49,541 | $57,252 | $490,630 | $890,000 | ? |
For Gamma Omega Co. in the previous question, how would be the auditor’s conclusion about the population based on these results differ if performance materiality allocated to sales was $25,000?
Expert Answer:
Total Projected Error 490630 57252 433378 The auditor would conclude that the population is oversta... View the full answer
