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Chapter 9

# Chapter 9 - Chapter 09 Audit Sampling An Application to...

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Chapter 09 - Audit Sampling: An Application to Substantive Tests of Account Balances 9-1 CHAPTER 9 AUDIT SAMPLING: AN APPLICATION TO SUBSTANTIVE TESTS OF ACCOUNT BALANCES Answers to Multiple-Choice Questions 9-11 d 9-16 b 9-12 d 9-17 a 9-13 b 9-18 a 9-14 a 9-19 c 9-15 c 9-20 c Solutions to Problems 9-21 a. The advantages of MUS over classical variables sampling are as follows: MUS sampling is generally easier to use than is classical variables sampling. The calculation of sample size in a MUS sample is not based on an estimate of the standard deviation in the population. MUS sampling in conjunction with probability-proportional-to-size selection results in a stratified sample. Individually significant items are automatically identified. If no misstatements are expected, MUS will usually result in a smaller sample size than classical variables sampling. b. Using Table 8-5 in the text with a desired confidence level = 95%; tolerable misstatement = 5% (\$15,000 ÷ \$300,000); and expected misstatement = 2% (\$6,000 ÷ \$300,000); the sample size is equal to 181 items. The sampling interval is \$1,657 (\$300,000 ÷ 181). Using ACL with a desired confidence level = 95%; population = \$300,000; tolerable misstatement = \$15,000; and expected misstatement = \$6,000; the sample size is equal to 161 items. The sampling interval is \$1,853.93. c. The total projected misstatement for the three misstatements identified is calculated by first computing the tainting factor as follows: Misstatement Number Book Value Audit Value Tainting Factor 1 \$400 \$320 .20 2 500 0 1.00 Not applicable, since book value

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