AUDITING LL W/ CONNECT <C>
11th Edition
ISBN: 9781307416268
Author: MESSIER
Publisher: MCGRAW-HILL HIGHER EDUCATION
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Chapter 9, Problem 9.22P
a
To determine
Introduction:
Monetary Unit Sampling (MUS): It is a method used to gauge the amount of misstatement in financials. MUS helps auditors to overcome difficulties in other sampling systems. MUS is normally used for testing accounts related to monetary assets.
The
b
To determine
Introduction:
Monetary Unit Sampling (MUS): It is a method used to gauge the amount of misstatement in financials. MUS helps auditors to overcome difficulties in other sampling systems. MUS is normally used for testing accounts related to monetary assets.
The Upper misstatement limit UML for the following misstatements.
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Hattab auditing Co. was conducting the audit of Metro market for the fiscal year ended December 31. The auditor decides that MUS is the appropriate sampling technique to use in order to audit Metros’ inventory account. The balance in the inventory at December 31 was $3,000,000. The auditor has established the following: the desired confidence level of 90%, tolerable misstatement $270,500, and expected misstatement $65,500.
Requirement: 1- Calculate the sample size and sampling interval.
2- The staff accountant performed the audit procedures listed in the invent+ory audit program for each sample item. Using the sample size computed in requirement (1), calculate the upper limit on misstatement based on the following misstatements.
Error Number
Book Value
Audit Value
1
6,000 $
1,000 $
2
24,000 $
39,000 $
3
55,000 $
57,000 $
A CPA company is conducting the audit of Finch Hardware Company for the year ended December 31. The senior-in-charge of the audit plans to use MUS to audit Finch’s inventory account. The balance at December 31 was $9,000,000, tolerable misstatement is $360,000, expected misstatement is $90,000, and the risk of incorrect acceptance is 5%. Compute the required MUS sample size and sampling interval using Table 8-5 in the textbook (round your interval answer to the nearest whole number).
Assume that you are auditing the inventory of Husky Manufacturing Company for the year ended December 31, 2015, and you are using MUS. The book value is $8,124,998.66. The risk of incorrect acceptance is 10% (90% confidence level). The tolerable misstatement is $275,000, and expected misstatement is $80,000, so the ratio of expected misstatement to tolerable misstatement is 29%. The ratio of tolerable misstatement to the population book value is 4.3%.
Calculate the sample size and the sampling interval.
Calculate the total estimated misstatement assuming the following misstatements were found in the sample:
Book value
Audit value
$41,906.45
$36,906.45
$335,643.28
$333,643.28
What conclusion do you reach based upon your calculation?
Chapter 9 Solutions
AUDITING LL W/ CONNECT <C>
Ch. 9 - Prob. 9.1RQCh. 9 - Prob. 9.2RQCh. 9 - Prob. 9.3RQCh. 9 - Prob. 9.4RQCh. 9 - Prob. 9.5RQCh. 9 - Prob. 9.6RQCh. 9 - Prob. 9.7RQCh. 9 - Prob. 9.8RQCh. 9 - Prob. 9.9RQCh. 9 - Prob. 9.10RQ
Ch. 9 - Prob. 9.11MCQCh. 9 - Prob. 9.12MCQCh. 9 - Prob. 9.13MCQCh. 9 - Prob. 9.14MCQCh. 9 - Prob. 9.15MCQCh. 9 - Prob. 9.16MCQCh. 9 - Prob. 9.17MCQCh. 9 - Prob. 9.18MCQCh. 9 - Prob. 9.19MCQCh. 9 - Prob. 9.20MCQCh. 9 - Prob. 9.21PCh. 9 - Prob. 9.22PCh. 9 - Prob. 9.23PCh. 9 - Prob. 9.24PCh. 9 - Prob. 9.25PCh. 9 - Prob. 9.26P
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