1. 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:

• Basic precision.
• The incremental allowance for sampling risk.
• The upper misstatement limit.

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

AP10.8 (LO 8) Challenging Evaluating a PPS sample Assume the following misstatements were found in a PPS sample: Sample Item Book Value Audit Value $ 650 $ 585 540 1,900 2,200 2,800 1,650 2,660