Auditing: A Risk Based-Approach (MindTap Course List)
Auditing: A Risk Based-Approach (MindTap Course List)
11th Edition
ISBN: 9781337619455
Author: Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg
Publisher: Cengage Learning
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Chapter 8, Problem 22RQSC
To determine

Introduction: The total misstatement is the sum of the top-stratum misstatement and lower-stratum misstatement.

Requirement 1

To calculate: Calculate the total misstatement.

To determine

Introduction:Tolerable limit of misstatement is the maximum limit to control the risk of the audit in account transaction section.

Requirement 2

Clarify the above result when tolerable misstatement is $25,000.

To determine

Introduction:The results are not acceptable when the tolerable limit is lower than the actual misstatement.

Requirement 3

Possible actions taken by the auditor when results are not acceptable.

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Students have asked these similar questions
When inventory items have price movements in excess of 50% (considered material), how does this affect the risk of material misstatement (how does it increase inherent or control risk?) and what accounts and management assertions are most likely influenced by this? (Auditing)
Q. If the auditor traces a sample of receiving reports to the inventory records, the auditor is testing the control of validity. Options: A. True B. False
As part of your audit of a client’s inventory balance, you created an expectation of what should be the inventory balance by using the gross profit method. The only concern was the difference between your expectation and the client’s financial statements which come in the form of using the gross profit method of estimating inventory as against the client reported balance which is below audit materiality level for audit of inventory. What is the best choice to do next? * A. Discuss with the management the implication of the significant difference and propose an adjusting journal entry accordingly.B. Extend audit procedures by doing further analytical procedures on the inventory balance.C. Extend audit procedures by doing test of details of the account balance.D. Issue an unqualified opinion

Chapter 8 Solutions

Auditing: A Risk Based-Approach (MindTap Course List)

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