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 $640,000. The projected misstatement based on this sample is:
A) $5,000
B) $45,000
C) $60,000
D) $70,000

Question

Quizplus · Accepted Answer

The projected misstatement is calculated by subtracting the point estimate from the book value and then subtracting the adjusted allowance for sampling risk.

Projected misstatement = (book value - point estimate) + adjusted allowance for sampling risk
Projected misstatement = ($700,000 - $640,000) + $45,000
Projected misstatement = $60,000

Therefore, the projected misstatement based on this sample is $60,000. The best choice is C.

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