Auditing And Assurance Services
17th Edition
ISBN: 9780134897431
Author: ARENS, Alvin A.
Publisher: PEARSON
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Question
Chapter 17, Problem 29DQP
(a).
To determine
Compute the upper misstatement bound on the basis of the client misstatements in the sample.
(b).
To determine
Identify whether the population acceptable as stated and to find out the options available and which option the auditor should select.
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McMullen and Milligan, CPAs, were conducting the audit of Cusick Machine Tool Company for the year ended December 31. Jim Sigmund, senior-in-charge of th audit, plans to use MUS to audit Cusick's invenotry account. Thee balance at December 31 was $9,000,000.
Required:
A) Based on the following information, compute the required MUS sample size:
Tolerable misstatement = $360,000
Expected misstatement = $90,000
Risk of incorrect acceptance = 5%
B) Nancy Van Pelt, staff accountant, used the sample items selected in part (a) and performed the audit procedures listed in the inventory audit program. She notes the following misstatements:
Misstatement Number Book Value Audit Value
1 $10,000 $7,500
2 $9,000 $6,000
3 $60,000 0…
McMullen and Milligan, CPAs, were conducting the audit of Cusick Machine Tool Company for the year ended December 31. Jim Sigmund, senior-in-charge of th audit, plans to use MUS to audit Cusick's invenotry account. Thee balance at December 31 was $9,000,000.
Required:
A) Based on the following information, compute the required MUS sample size:
Tolerable misstatement = $360,000
Expected misstatement = $90,000
Risk of incorrect acceptance = 5%
B) Nancy Van Pelt, staff accountant, used the sample items selected in part (a) and performed the audit procedures listed in the inventory audit program. She notes the following misstatements:
Misstatement Number Book Value Audit Value
1 $10,000 $7,500
2 $9,000 $6,000
3 $60,000 0…
James Duffney, CPA, has randomly selected and audited a sample of 100 of Will-Mart’s accounts receivable. Will-Mart has 6,140 accounts receivable accounts with a total book value of $6,000,000. Duffney has determined that the account’s tolerable misstatement is $500,000. His sample results are as follows:
Average audited value $962
Average book value 970
Required:
Calculate the accounts receivable estimated audited value and projected misstatement using the:
a. Mean-per-unit method.
b. Ratio method.
c. Difference method.
Chapter 17 Solutions
Auditing And Assurance Services
Ch. 17 - Prob. 1RQCh. 17 - Prob. 2RQCh. 17 - Prob. 3RQCh. 17 - Prob. 4RQCh. 17 - Prob. 5RQCh. 17 - Prob. 6RQCh. 17 - Prob. 7RQCh. 17 - Prob. 8RQCh. 17 - Prob. 9RQCh. 17 - Prob. 10RQ
Ch. 17 - Prob. 11RQCh. 17 - Prob. 12RQCh. 17 - Prob. 13RQCh. 17 - Prob. 14RQCh. 17 - Prob. 15RQCh. 17 - Prob. 16RQCh. 17 - Prob. 17RQCh. 17 - Prob. 18RQCh. 17 - Prob. 19RQCh. 17 - Prob. 20RQCh. 17 - Prob. 21.1MCQCh. 17 - Prob. 21.2MCQCh. 17 - Prob. 21.3MCQCh. 17 - Prob. 22.1MCQCh. 17 - Prob. 22.2MCQCh. 17 - Prob. 22.3MCQCh. 17 - Prob. 23.1MCQCh. 17 - Prob. 23.2MCQCh. 17 - Prob. 23.3MCQCh. 17 - Prob. 24.1MCQCh. 17 - Prob. 24.2MCQCh. 17 - Prob. 24.3MCQCh. 17 - Prob. 25DQPCh. 17 - Prob. 26DQPCh. 17 - Prob. 27DQPCh. 17 - Prob. 28DQPCh. 17 - Prob. 29DQPCh. 17 - Prob. 30DQPCh. 17 - Prob. 31DQPCh. 17 - Prob. 32DQPCh. 17 - Prob. 34DQPCh. 17 - Prob. 35DQP
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