Question -
An essential step in difference estimation is the comparison of each computed confidence limit with tolerable misstatement. Why is this step so important, and what should the auditor do if one of the confidence limits is larger than the tolerable misstatement?
Assume that the auditor tested an account receivable with a balance of $5,000 and determined that the audited value was $4,500. That is, the auditor determined the receivable was overstated by $500. What is the projected misstatement (excluding the incremental allowance for sampling risk) 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. That is, the auditor determined the receivable was overstated by $300. What is the projected misstatement (excluding the incremental allowance for sampling risk) if the sampling interval is $15,000?