John has just completed testing of the depreciation of property, plant and equipment for his client Happy Grapple Ltd.

Information from the draft financial report of Happy Grapple shows (rounded to $000s):

Profit before tax $2 737

Property, plant and equipment $16 564

In testing depreciation, John selected a sample of 35 items with a value of $1 672 000 and had established a tolerable error was 5% of base values. The result of the tests showed systematic errors in the sample of $72 400 and John has concluded that this is an acceptable error and no further audit work is required.

Required:

You are Johns manager and are reviewing his work, do you agree with his assessment?