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Reliability Factors for Risk Levels

EXHIBITS

Year $1$ Advice

Reliability Factors for Risk Levels

Email from Tim

Assumptions of Sheri

What is the risk of incorrect acceptance? Select from the option list provided the correct percentage.

Percentage

Enter the correct amounts in the designated cells below using the information relating to the audit of Gator Co$.$ Round all amounts to the nearest hundredth.

$\backslash$table$[[$Factor$,$Amount$],[2.$ Appropriate reliability factor,$],[3.$ Tolerable misstatement,$],[4.$ Sampling interval,$],[5.$ Sample size,$]]$

$\backslash$table$[[$Risk of Incorrect Acceptance,Reliability Factor$],[1\%,4\mathrm{.}61],[5\%,3\mathrm{.}00],[10\%,2\mathrm{.}31]]$

Note: Figures provided are based on the assumption that no overstatements are expected.

Assumptions of Sheri

To: Jay Bruce, CPA

From: Sheri Lansing, CPA

Date: January $15,$ Year $2$

RE: Audit Assumptions

Hey Jay,

Tim told me that you were new to our firm, so I want to begin by saying welcome to the team! Tim also mentioned that you were new to auditing. He asked me to send over a copy of some notes and assumptions that pertain to an audit engagement for Gator $Co.$ which we are wrapping up fairly soon. Here is my copy:

Notes and Assumptions on Audit of Gator Co$.$

The population contains $$700,000($sampling units$)$ and over $700$ individual accounts receivable $($logical sampling units$),$ all with debit balances.

Our audit team desires to be $95\%$ confident that the recorded balance is not overstated by more than $$25,000.$ $$25,000.$

Our audit team anticipates no misstatements.

Our audit team has decided to use probability$-$proportional$-$to$-$size sampling, also known as monetary unit sampling, in this audit engagement.

Hopefully this will help you understand the sampling plan for Gator Co$.$ Please do not hesitate to ask if Sincerely,

Sheri