An essential step in difference estimation is the comparison of each computed confidence limit with tolerable misstatement. Why is this step soimportant, and what should the auditor do if one of the confidence limits is larger than the tolerablemisstatement?

Assume that the auditor tested an account receivable with a balance of $5,000 and determined that the audited value was $4,500. Thatis, the auditor determined the receivable was overstated by $500. What is the projected misstatement(excluding the incremental allowance for samplingrisk) if the sampling interval is $13,000?

Assume that the auditor tested an account receivable with a balance of$3,000 and determined that the audited value was $2,700. Thatis, the auditor determined the receivable was overstated by $300. What is the projected misstatement(excluding the incremental allowance for samplingrisk) if the sampling interval is $15,000?