Assume a Mean-Per-Unit Estimation Variables Sampling Application with a Tolerable

question 50

Multiple Choice

Assume a mean-per-unit estimation variables sampling application with a tolerable misstatement of $70,000 and a book value of $700,000. After performing the sampling plan, the auditors calculated an adjusted allowance for sampling risk of $45,000 and a point estimate of the population's total audited value to be $650,000. Based on these results, the auditor would:

• A) Because the tolerable misstatement exceeds the adjusted allowance for sampling risk, conclude that the population does not contain a material misstatement.
• B) Because the total audited value ± tolerable misstatement includes the book value, conclude that the population does not contain a material misstatement.
• C) Because the tolerable misstatement exceeds the adjusted allowance for sampling risk, conclude that there is too great a risk that the account balance is materially misstated.
• D) Because the total audited value ± adjusted allowance for sampling risk does not include the book value, conclude that there is too great a risk that the account balance is materially misstated.

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Definitions:

Type A Personality

A temperament characterized by high levels of ambition, aggression, competitiveness, drive, impatience, need for control, focus on time management, and stress.

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An individual's belief that external forces, beyond their personal control, have a significant impact on their life events and outcomes.

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The emotional or physical strain experienced as a response to challenging or demanding situations.

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