The following is a computer printout generated by audit software using probabilityproportionaltosize (PPS)sampling: WINZ CORPORATION Receivable Sampling
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WINZ CORPORATION Receivable Sampling Evaluation Results December 31, 20X2 Population book value $2,400,000; Tolerable misstatement $280,000 Projected Misstatement Audited Value Tainting Value Misstatement Percentage Misstatement S 1,000.00 987.50 600.00 60,000.00 1.25% 20% $80,000.00 80,000.00 1000.00 16,000.00 25,000.00 42,000.00 240,000.00 S 12.50 750.00 85,000.00 25,000.00 Basic Precision 3.0 $80,000 Incremental Allowance Projected Misstatement Incremental Allowance Reliability Factor Increment (Increment 1) 4.75 $16,000.00 $12,000.00 550.00 $12,550.00 The sofeware uscs factors from the following PPS sampling table: TABLE Reliability Factors for Number of Risk of Incorrect Acceptance 10% 15% 4.75 6.30 7.76 1.61 4.28 6.73 4.72 Analysls Situation Answer the following questions relating to the above workshcet: Questions a. What was the planned sample size? b. What is the total misstatement in the sample? C. What is the most likely total misstatement in the population? d. Calculate the upper limit on misstatement. e. Calculate the allowance for sampling risk f. Would one "accept" or Treject" the population as being materially correct? g. What is the risk of incorrect acceptance? 1.30 items 2. 60 items 3. 76 items 4.90 items 6.$ 12,550.00 7. $ 25,162.50 8. $42,000.00 9.$ 54,550.00 10. $ 80,000.00 11. S252,550.00 12. $280,000.00 13. $294,550.00 14. S354,550.00 15. Accept 16. Reject 17.5% 18.20% 19, 100%
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Simulation a 1 30 items Calculated by dividing the population book value 2 400 000 ...View the full answer
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Related Book For
Principles of Auditing and Other Assurance Services
ISBN: 9780078025617
19th edition
Authors: Ray Whittington, Kurt Pany
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