How should the auditor define the population of interest

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Reference no: EM133331663

Question: Monetary-unit sampling (MUS) theory is used to test KLM Inc.'s Accounts Receivable. The recorded balances on KLM's books feature 25 separate customers, as follows: Customer #1 $100; Customers #2, #3, #4, ... Customers #22, #23 #24 $500; Customer #25 $10,000. In addition, unbeknownst to the auditor, Customer #26 owes KLM $4,300, but KLM's accounting records fail to make record that fact. Assume that the auditor appropriately desires a 90% confidence rate and expects a 0.25% rate of misstatement. The auditor also appropriately assumes a 100% tainting factor for those misstatements that might exist in the population but for which no representative misstatement obtains in the sample. Last, assume that the auditor appropriately determines the tolerable misstatement is $1,260. (Hint: You might want to tally the relevant customer accounts in Excel). How should the auditor define the population of interest?

Reference no: EM133331663

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