Use the following precision factors to calculate the projected misstatement in an account with the given information:

5% risk of incorrect acceptance/0 mistakes: 2.01 5% risk of incorrect acceptance/1 mistake: 3.15 5% risk of incorrect acceptance/2 mistakes: 4.50 Risk of incorrect acceptance is 5% Sampling interval is $22,000 Factual misstatement in top stratum is $105 Lower stratum misstatement #1 is a $100 error on a $5,000 book balance. Lower stratum misstatement #2 is a $30 error on a $900 book balance.

Explain how you would determine if the misstatement is material or not after calculating the projection. Give me an example of a quantitative materiality theshhold and tell me if the misstatement is material or not.

Answer rating: 100% (QA)

To determine if the misstatement is material or not we need to compare the projected misstatement to ... View the full answer