17 - 17-25 a-c 4. 3. 3 17-26 a-c 4. 2. 2 17-28 A. 113....

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Unformatted text preview: 17-25 a-c 4. 3. 3 17-26 a-c 4. 2. 2 17-28 A. 113. 183219-173219=10000 219. (23457-16937)=6520 267. (8439-7867)=572 573. (7452-6832)=620 847. (34583-23649)=10934 Total is overstated 28646 b. 113. (183219-173219)/183219=0.055 219. (23457-16937)/23457=0.278 267. (8439-7867)/8439=0.0678 573. (7452-6832)/7452=0.0832 847. (34583-23649)/34583=0.316 Total point estimate of misstatement=(0.055+0.278+0.0678+0.0832+0.316)*939197=752297 C. The population is not acceptable. And I will consider the follow-up actions: 1.calculated sampling error, 2. The extent to which items in the population have been audited 100%, 3. Whether misstatements tend to be offsetting or in only one direction, 4. The aomounts of individual misstatements 5. The sample size. 17-30 A. 1. (2728-2498)/2728=0.0843 3. (3890-1190)/3890=0.694 4. (791-815)/791= -0.03 5. (548-1037)/548= -0.892 6. (3115-3190)/3115= -0.024 Upper misstatement bound before adjustment: 1975*0.023*1=45425 1975*0.016*0.694=21930 1975*0.014*0.084=2323 Total= 69678 Lower misstatement bound before adjustment: 1975*0.023*1=45425 1975*0.016*0.892=28187 1975=0.014*0.03=830 1975*0.013*0.024=616 Total=75058 Adjustment of upper misstatement bound Point estimate for understatement amounts= (0.892+0.03+0.024)*(1975,000/100)=18684 Adjusted bound= 69678-18684=50994 Adjustment of lower misstatement bound Point estimate for understatement amounts= (0.694+0.084)*(1975,000/100)=15366 Adjusted bound= 75058-15366=59692 B. The population is nor acceptable, because the lower and upper misstatement bound >materiality The options: 1. Segregate a specific type of misstatement 2. Increase the sample size 3. Request the client to review and correct the population 4. Adjust the account balance. The auditor should select the 1. Option. Because the NO.3 and 5 are cutoff misstatements. If segregating them, testing cutoff should more extensively, and both misstatement bounds will less materiality. ...
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This note was uploaded on 08/12/2011 for the course ACCT 620 taught by Professor Smith during the Spring '11 term at Alabama A&M University.

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17 - 17-25 a-c 4. 3. 3 17-26 a-c 4. 2. 2 17-28 A. 113....

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