An auditor is confirming a population of accounts receivable for monetary correctness. The population totals $2,000,000 and a sample of 200 confirmations is obtained. Upon audit, no misstatements are uncovered in the sample. Assuming an ARIA of 10%, the confidence factor would be 2.31. Applied to a sampling interval of $10,000, the upper misstatement bound is calculated as
A) $462.
B) $4,329.
C) $23,100.
D) $865,801.

Question

Quizplus · Accepted Answer

The upper misstatement bound is calculated by multiplying the confidence factor (2.31) by the sampling interval ($10,000), resulting in $23,100. This represents the maximum misstatement that the auditor can tolerate while still maintaining the desired level of assurance (90% in this case, given an ARIA of 10%).

An Auditor Is Confirming a Population of Accounts Receivable for Monetary