The auditors of loopy limited wish to use a structured

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The auditors of Loopy Limited wish to use a structured approach to non-statistical sampling to evaluate the reasonableness of the accounts receivable. Loopy has 6,800 accounts receivable with a total book value of $3,000,000. The auditors have assessed the combined level of inherent and control risk at a moderate level and believe that their other substantive procedures are so limited as to require a maximum risk assessment. After considering the overall audit plan, the auditors believe that the tolerable misstatement is $225,000.

(a) Calculate the required sample size.

(b) Assuming the following results: Number of items in the sample = 31;

Total audited value of sample items = $14,000;

Total book value of sample items = $15,000.

(1) Use the ratio estimation method to calculate the projected misstatement of the population.

(2) Use the difference estimation method to calculate the projected misstatement of the population.

Reference no: EM13576135

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