5% Reliability factors for overstatements # of overstatements Risk of Incorrect Acceptance 5 10 15 20 0 3.00 2.31 1.90 1.61 W N 4.75 3.89 3.38 3.00 6.30 5.3. 4.7 7.7 4.28 5.69 6.0 .1 5.5 8.00 10.52 7.27 6.73 9.28 3.50 11.85 7.91 10.54 9.71 9.08 14 Assume the following misstatements were found in a PPS sample: Sample item Book value Audit Value 650 585 540 1.900 0 0 2,200 1,650 2.800 2.660 Required. A) Calculate the total projected misstatement by completing the following tables assuming: 1) The sampling interval was $1,800. 2) The sampling interval was $2,000. Al) Item Book Value Audited Amt Overstatement Taint Interval Projected W N 50 585 Misstatement 65 540 0.1 1,800 180 540 1,900 1.800 4 0 ,800 2,200 1,900 N/A N/A 1,900 5 .650 550 2,800 N/A N/A 550 2,660 140 Total N/A N/A 140 8,090 4.895 3,195 4.570 A2) Item Book Value Audited Amt Overstatement Taint Interval Projected 1 650 585 Misstatement 2 65 540 0.1 2,000 200 0 540 1.0 1,900 2,000 2,000 2,200 1,900 1.0 1,650 2,000 2,000 5 550 N/A 2,800 N/A 550 Total 2,660 140 8.090 N/A 4.895 N/A 140 3.195 4.890 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 the upper misstatement bound by completing the following table: Incremental Projected Item Projected Change in Misstatement Misstatement Confidence plus Incremental Factor Allowance for Sampling Risk VIAWN - 200 3.38 2,000 676 4.72 9.440 2,000 6.02 550 2,040 N/A 550 140 Basic Precision N/A 140 2,000 x 1.90 Upper 3,800 Misstatement Bound 26.646