Problem
Assume you performed sampling for an accounts receivable population that had a recorded population amount of $1,975,000. You set a tolerable misstatement of $50,000 at an ARIA of 10%. A MUS sample of 100 was selected from the accounts receivable population. The following table shows the differences uncovered in the confirmation process:
Recorded Amount Audit Amount
1) 2750 2450
2) 3650 1150
3) 815 785
4) 3100 3050
5) 27500 2100
i. Calculate the upper misstatement bound on the basis of the client misstatement in the sample. You can work on an excel table and copy/paste your work on the answer sheet with detailed explanation.
ii. Determine whether the population is acceptable as stated. If not, explain what options are available to the auditor at this point.