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The total value of accounts payables is $1,200,000 consisting of 850 items. The auditor randomly selected 65 items for testing. The dollar value of the sample of accounts payables selected for testing is $180,000. Assume the auditor discovered errors totalling $17,600 when conducting the substantive testing of the sample.
Required:
Problem (a) Extrapolate the errors to the population and calculate the total projected error. Show all workings.
Problem (b) What would the auditor conclude if the projected error calculated in (a) above fell below the tolerable error set for materiality?
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