L12 Notes_Part_17 - The auditor has make the following...

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The auditor has make the following estimates and decision: Tolerable Misstatement for overstatements $60,000 Anticipated Misstatement 10,000 Recorded amount of accounts receivable 1,975,000 Acceptable Risk of Incorrect Acceptance 10% Average percent of error assumption – overstatements 50% Average percent of error assumption – understatements 150% b. Is the population acceptable as stated? If not, what options are available to the auditor at this point? Which option should the auditor select? Explain. UML<TM 27,813 < 60,000 so, we are not as concerned about overstatements; however, LML >TM 60056 > 60,000 so, the balance is not fairly stated.
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take no action until tests of other audit areas are completed perform expanded or different additional audit tests over accounts receivable Segregate a specific type of error and test it separately. The population would then not include the specified type of error since it is being tested separately. increase sample size to estimate UML or LML more precisely request the account balance be adjusted request the client to correct the population
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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_17 - The auditor has make the following...

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