If an auditor were to calculate an estimate of the errors by direct projection from the sample to the population, and found $15,000 of net overstatement errors in a sample of $100 000 out of a total population of $500 000, the estimate of errors in the population would be:

Question

Quizplus · Accepted Answer

The auditor would calculate the estimate of errors by projecting the error rate in the sample to the entire population. In this case, the sample has errors of $15,000 in $100,000, or 15%. Therefore, if we project this error rate to the entire population of $500,000, we would estimate errors of $75,000 ($500,000 x 0.15). Choice C is the closest to this estimate.

If an Auditor Were to Calculate an Estimate of the Errors