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What is estimate of the total misstatement in inventory

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You are evaluating audit results for assets in the audit of Brooms Manufacturing. You set the preliminary judgment about materiality at 560.000 The account balances performance materiality. and estimated overstatements in the accounts are shown next

Requirements

Question a. Assume you tested inventory amounts totaling $900.000 and found 513.500 in overstatements Ignoring sampling risk. what is your estimate of the total misstatement in inventory?

Question b. Based on the audit of the assets accounts and ignoring other accounts are the overall financial statements acceptable? Explain

Question c. What do you believe the auditor should do in the circumstances?

Account

Account
Balance

Performance
Materiality

 

Estimate of Total
Overstatements

Cash

S                 60.000

S                    3.000

S

1.000

Accounts receivable

1.400,000

35.000

 

17.000

Inventory

3.000,000

60 000

 

7

Other assets

330,000

16.500

 

12,500

Total

S            4.790.000

$                114.500

 

 

 

 

 

 

Reference no: EM132473450

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