AUDIT 2 You are auditing the accounts receivable for Dragon, Inc. Consider the f
ID: 2541435 • Letter: A
Question
AUDIT 2
You are auditing the accounts receivable for Dragon, Inc. Consider the following:
ARIA is 5%
Accounts Receivable balance us $525,000
Number of accounts is 2,205
You selected 50 accounts to confirm - these had a balance of $22,000
Tolerable Misstatement is $25,000
All confirmations came back as correct except for the following
Required: Is the population acceptable? SHOW ALL WORK to justify your answer.
Acct # Recorded Value Audit Value 20 $9,375.00 $8,375.00 33 1,201.15 1,001.15 41 410.41 395.00Explanation / Answer
Yes, the population is acceptable though there are few misstatements and it is considered to be negligible since the difference between the reported and the audited values in all the three items is very close or small and hence , it can be ignored.
The tolerable misstatements is $25,000 and all these when put together did not constitute for the same and therefore, as per my knowledge is concerned, the population is acceptable .
Also the percentage of errors found is negligible I.e, 3 out of 50.
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