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LECTURE_8_Module_9_Sampling_S2_2008

# Inthiswayweareprojectingtheerrorforthat

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Unformatted text preview: Projected Error \$20,538 Tainting Tainting The need to estimate the degree of error in the remainder of the sampling interval where the book value is lower than the sampling interval. In this way we are projecting the error for that particular sampling interval NOTE: When book value is less than sampling interval value the projected error = tainting x sampling interval (100% x SI) When book value is greater than sampling interval PE = actual error amount Projected Population Error Projected Population Error Projected Population error based on the projection of the error rate found in the sample Total Projection Error = The sum of the projection errors for individual errors identified in the sample Calculate Upper Error Limit Calculate Upper Error Limit (consists of 3 conponents) UEL = PE + BP + PGW Where UEL = Upper Error Limit PE = Projected Error BP = Basic Precision PGW = Precision Gap Widening Basic Precision/Error Basic Precision/Error Basic Precision is the Upper Error Limit when zero errors are estimated in the sample The sampling risk or the risk associated with not testing 100% 2. Basic Precision/Error 2. Basic Precision/Error BP = RF x SI Where BP = Basic Precision RF = Reliability Factor ­ from Table 9.1 for zero errors at desired level of confidence Basic Precision Basic Precision From Example SI = \$7538 RF at 90% Confidence Level & Zero Errors = 2.31 BP = 7538 x 2.31 BP = 17412.78 or \$17413 3. Precision Gap Widening 3. Precision Gap Widening Also called Projection Risk The risk associated with projecting the degree of overstatement in the sampling interval using tainting process Is only calculated therefore for the projection errors where tainting is applied Is the sum of {(the projected errors) x (the incremental change in the reliability factor – 1)} Precision Gap Widening Incremental change in reliability factors are given in table 9.2 in the study guide. When performing calculation select those individual projection errors where tainting has been appl...
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