included in a given sample draw. It was included twice in a sample of 10. d. There is no significant difference in ease of selection between computer generation of random numbers and systematic selection. Some auditors prefer the use of random numbers because they believe this helps ensure an unbiased sample. e. Monetary unit sampling would be used because (1) it is efficient and (2) it focuses on large dollar items. (see text Web site for Excel solution for part a. - Filename 17-27 P1727.xls) a. The differences that were uncovered include only four misstatements rather than Items 2, 5, and 7 are not misstatements, but only timing differences. Therefore, only the four misstatements are summarized in order to compute the upper misstatement bound. These misstatements are summarized below. Calculation in Excel can be performed using P1727.xls. MISSTATEMENT/ RECORDED FACTUAL RECORDED ITEM VALUE AUDITED MISSTATEMENT VALUE 1 $2,728.00 $2,498.00 $ 230.00 .084 3 3,890.00 1,190.00 2,700.00 .694 4 815.00 785.00 30.00 .037 6 3,215.00 3,190.00 25.00 .008 Totals $10,648.00 $7,663.00 $2,985.00 The calculation of the misstatement is given below: (e = c x d) PROJECTED (d) MISSTATEMENT ( c = a x b) INCREMENTAL PLUS (b) PROJECTED CHANGE IN INCREMENTAL (a) SAMPLING CONFIDENCE ALLOWANCE FOR TAINTING INTERVAL FACTOR SAMPLING RISK
included in a given sample draw. It was included twice in a sample of 10. d. There is no significant difference in ease of selection between computer generation of random numbers and systematic selection. Some auditors prefer the use of random numbers because they believe this helps ensure an unbiased sample. e. Monetary unit sampling would be used because (1) it is efficient and (2) it focuses on large dollar items. 17-27 (see text Web site for Excel solution for part a. - Filename P1727.xls) a. The differences that were uncovered include only four misstatements rather than Items 2, 5, and 7 are not misstatements, but only timing differences. Therefore, only the four misstatements are summarized in order to compute the upper misstatement bound. These misstatements are summarized below. Calculation in Excel can be performed using P1727.xls. ITEM RECORDED VALUE AUDITED FACTUAL MISSTATEMENT MISSTATEMENT/ RECORDED VALUE 1 3 4 6 $2,728.00 3,890.00 815.00 3,215.00 $2,498.00 1,190.00 785.00 3,190.00 $ 230.00 2,700.00 30.00 25.00 .084 .694 .037 .008 Totals $10,648.00 $7,663.00 $2,985.00 The calculation of the misstatement is given below: (a) TAINTING (b) SAMPLING INTERVAL ( c = a x b) PROJECTED (d) INCREMENTAL CHANGE IN CONFIDENCE FACTOR (e = c x d) PROJECTED MISSTATEMENT PLUS INCREMENTAL ALLOWANCE FOR SAMPLING RISK