Thank you for your help!
You are evaluating audit results for assets in the audit of Mannings Manufacturing. You set the preliminary judgment about materiality at $55,000. The account balances, performance materiality, and estimated overstatements in the accounts are shown below. Read the requirements: Requirement a. Assume you tested invenlory amounts totaling $750,000 and found $30,000 in overstatements. Ignoring sampling risk, what is your estimate of the total misstatement in inventory? (Do not round intermediary calculations. Only round the amount you enter in the input field to the nearest dollar.) Requirement b. Based on the audit of the assets accounts and ignoring other accounts, are the overall financial statements acceptable? Explain Stan by laentifying the estimate of the total overstatemen based on the ausit of the assets accounts and ignoring other accounts. Estimate of total overstatement We the ovoral financial starements accoptabie? Explain. We can conclude that the oreral financial statomem acceptable because the total estimated overstinement of assets excoeds the mameriaity amoum. Requinement e. Whal do you beilowe the audhor should do in the circumstancos? Requirement b. Based on the audit of the assets accounts and ignoring other accounts, are th Start by identifying the estimate of the total overstatement based on the audit of the assets acci Estimate of total overstatement Are the overall financial statements acceptable? Explain. We can conclude that the overall financial statement acceptable because the total estimated overstatement of assets exceeds the materiality amount. estimated overstatement of assets exceeds the total performance materiality. estimated overstatement of assets is less than the materiality amount. estimated overstatement of assets is less than the total performance materiality. overstatement Are the overall financial statements acceptable? Explain. We can conclude that the overall financial statement acceptable because the total Requirement c. What do you believe the auditor should do in the circumstances? A. The auditor should either propose an audi adjustment so that the unadjusted misstatement amount is less than the total performancemateriality andior perform more testing to obtain a better estimate of the population misstatements. 13. The guditor should conclude that total assets are lalrly presented in all material respocts. C. The auditor should either propose an Budit adjustment so that the unadjusted statement amount is less than materiality andior perform more besting to obtain a better estimate of the population misstatements. D. None of the above
