Problem
Use the following precision factors to calculate the projected misstatement in an account with the given information:
5% risk of incorrect acceptance/0 mistakes: 2.01
5% risk of incorrect acceptance/1 mistake: 3.15
5% risk of incorrect acceptance/2 mistakes: 4.50
Risk of incorrect acceptance is 5%
Sampling interval is $22,000
Factual misstatement in top stratum is $105
Lower stratum misstatement #1 is a $100 error on a $5,000 book balance.
Lower stratum misstatement #2 is a $30 error on a $900 book balance.
Explain how you would determine if the misstatement is material or not after calculating the projection. Give me an example of a quantitative materiality threshold and tell me if the misstatement is material or not.