L12 Notes_Part_16 - yi di di/xi 1. 2728 2498 230 .084 2....

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PPS Sampling Problem A/R A/R Per per Follow up comments by Records Confirmation the confirmation auditor 1. $2,728.00 $2,498.00 Pricing errors on two invoices 2. $5,125.00 -0- Customer mailed check 9/26; company received check 10/3. 3. $3,890.00 $1,190.00 Merchandise returned 9/30 and counted in inventory; credit was issued 10/6 4. $791.00 $815.00 Footing error on an invoice 5. $548.00 $1,037.00 Goods were shipped 9/28; sale was recorded On 10/6. 6. $3,115.00 $3,190.00 Pricing error on a credit memorandum 7. $1,540.00 -0- Goods were shipped on 9/29; customer received goods 10/3; sale recorded on 9/30 Four things to do with differences: 1) Delete nonerrors, 2) Separate items where recorded value>Interval size, 3) Separate over and understatements, and 4) Calculate tainting percentages and rank in terms of decreasing magnitude
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Book Value Audit Value Difference Tainting Item xi
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Unformatted text preview: yi di di/xi 1. 2728 2498 230 .084 2. 3890 1190 2700 .694 3. 791 815 <24> <0.030> 4. 548 1037 <489> <.892> 5. 3115 3190 <75> <.024> 0.500 9,777 $ NA 3.00 14,666 $ 0.694 9,777 6,785 1.75 (4.75 - 3.00) 11,874 0.084 9,777 821 1.55 (6.30 - 4.75) 1,273 Upper Misstatement Limit 27,813 $ ETF From first pg. of problem Due to the interest in over and understatements, the 10% ARIA is divided into 5% for each tail Item xi yi di di/xi 1. 2728 2498 230 .084 2. 3890 1190 2700 .694 3. 791 815 <24> <0.030> 4. 548 1037 <489> <.892> 5. 3115 3190 <75> <.024> Tainting Factor di/xi Sample Interval I Projected Misstatement I*(di/xi) Incremental Poisson Differential R(j)- R(j-1) Upper Misstatement I*[(R(j)-R(j-1)](dj/xj) 1.500 9,777 $ NA 3.00 43,997 $ 0.892 9,777 8,721 1.75 (4.75 - 3.00) 15,262 0.030 9,777 293 1.55 (6.30 - 4.75) 455 0.024 9,777 235 1.46 (7.76 - 6.30) 343 Lower Misstatement Limit 60,056 $ ETF...
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This note was uploaded on 10/05/2011 for the course ACG 5637 taught by Professor Monikacaushoulli during the Fall '08 term at University of Florida.

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L12 Notes_Part_16 - yi di di/xi 1. 2728 2498 230 .084 2....

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