L12 Notes_Part_11 - 21,057 9,024 30.0% Incorrect price used...

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Sample Size = BV * R*ETF/(TM – (AM*EF)) = (2,500,000 * RF * 1)/(128,000 – (0*EF) = (2,500,000 * 3.0 *1)/(128,000 – (0*1.6)) = 59 e rror E xpansion F actors ( EF ) for expected misstatements Risk of Incorrect Acceptance 1% 5% 10% 15% 20% Factor 1.9 1.6 1.5 1.4 1.3 R eliability factors for misstatements of overstatements Acceptable Risk of Incorrect Acceptance (ARIA) Number of Overstatements1% 5% 10% 15% 20% 0 4.61 3.00 2.31 1.90 1.61 1 6.64 4.75 3.89 3.38 3.00 2 8.41 6.30 5.33 4.72 4.28 3 10.05 7.76 6.69 6.02 5.52
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PPS Sampling Chapter 16 P8 Error Number Book Value Correct Value Error Tainting Factor Explanation 1 $71,330 $60,631 $10,699 15.0% Incorrect amount entered from a remittance (valuation) 2 18,996 17,096 1,900 10.0% Cash receipt recorded in wrong period (cutoff) 3 30,081
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Unformatted text preview: 21,057 9,024 30.0% Incorrect price used (valuation) 4 3,555 1,422 2,133 60.0% Posting to wrong subsidiary account (classification) PPS Sampling Chapter 16 P8 assume 100% tainting xi - yi = di di/xi Book Correct Difference Tainting Value Value (Error) Percentage 71330 60631 10699 15% N/A 18996 17096 1900 10% 30081 21057 9024 30% 3555 1422 2133 60% Interval = BV/n = 2,500,000/59 = 42,373 Tainting Factor assumed Sample Interval I = BV/n Projected Misstatement I*(di/xi) 95% Upper Limit R(j)- R(j-1) Upper Misstatement I*[R(j)-R(j-1)](dj/xj) 1.00 42,373 $ NA 3.0 127,119 $ 1.00 42,373 (42,373) 1.7 (4.7 - 3.0) 72,034 1.00 42,373 (42,373) 1.5 (6.2 - 4.7) 63,560 1.00 42,373 (42,373) 1.4 (7.6 - 6.2) 59,322 NA 42,373 NA 10,699 Upper Misstatement Limit 332,734 $ ETF...
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L12 Notes_Part_11 - 21,057 9,024 30.0% Incorrect price used...

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