sample Assume the following misstatements were found in a PPS sample:

Required

a. Calculate the projected misstatement assuming:

1. The sampling interval was $1,800.

2. The sampling interval was $2,000.

b. If a risk of incorrect acceptance of 15% is specified in the sample design, the sampling interval is $2,000, and five misstatements are found as enumerated above, calculate:

1. Basic precision.

2. The incremental allowance for sampling risk.

3. The upper misstatement limit.

c. If tolerable misstatement were $50,000 and expected misstatement were $10,000, what conclusion would you reach based on your results in (b) above?

Transcribed Image Text:

Sample Item Book Value Audit Value $ 650 $ 585 540 1,900 1,650 2,200 2,800 2,660 2. 3. 4.