Question
In the audit of One Price Company for the year ended September 30, the auditor set a tolerable misstatement of $ 30,000 at an ARIA
In the audit of One Price Company for the year ended September 30, the auditor set a tolerable misstatement of $ 30,000 at an ARIA of 15%. A PPS sample of 100 was selected from an accounts receivable population that had a recorded balance of $ 2, 150, 000
The following table shows the differences uncovered in the confirmation process:
| Accounts | Accounts |
|
| |
| Receivable | Receivable per |
|
| |
| per Records | Confirmation |
| Follow-up Comments by Auditor | |
| 1. | $2,230.00 | $1,910.00 | Pricing error on two invoices. | |
| 2. | $5,120.00 | -0- | Customer mailed check 9/26; company received check 10/3. | |
| 3. | $3,680.00 | $1,180.00 | Merchandise returned 9/30 and counted in inventory; credit | |
|
|
|
| was issued 10/6. | |
| 4. | $830.00 | $780.00 | Footing error on an invoice. | |
| 5. | $780.00 | -0- | Goods were shipped 9/28; customer received goods on 10/2; | |
|
|
| sale was recorded on 9/28. | ||
| 6. | $3,540.00 | $3,520.00 | Pricing error on a credit memorandum. | |
| 7. | $1,720.00 | -0- | Goods were shipped on 9/29; customer received goods 10/3; | |
|
|
|
|
| sale was recorded on 9/30. |
|
|
|
| Projected | |
|
|
|
| Misstatement | |
|
|
| Incremental | Plus Incremental | |
| Sampling | Projected | Change in | Allowance for | |
| Tainting | Interval | Misstatement | Confidence Factor | Sampling Risk |
| 0.679 | 21,500 | 14,599 |
|
|
| 0.143 | 21,500 | 3,075 |
|
|
| 0.060 | 21,500 | 1,290 |
|
|
| 0.006 | 21,500 | 129 |
|
|
|
|
| 19,093 |
|
|
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Taxation Of Individuals And Business Entities 2015
Authors: Brian Spilker, Benjamin Ayers, John Robinson, Edmund Outslay, Ronald Worsham, John Barrick, Connie Weaver
6th Edition
978-1259206955, 1259206955, 77862368, 978-0077862367
