Answer Happy

Question two 125 Marks KDL and Associates is currently conducting an audit of Simple Simon Limited for the year ended December 31, 2021. While conducting the audit of the year ended 2020, the audit manager observed the following misstatements as at December 31, 2020. The following information below entails the audited and balance per the general ledger of the customers: Customers General Ledger Audit balances Simon Stern $825.000 $850,000 Thomas Reid $500,000 $450,000 Stacy-Ann Green $1,000,000 $988,000 The total population of the trade receivables balance as at December 31, 2021 was $100 million, which comprise 200 customers. The auditor further stated that there is a 5% risk of assessing internal control too low. Required a. Determine the overstatement and understatement point estimates using the information above. 13 marks b. Calculate the adjusted upper and lower bound misstatements in the population and determine whether or not the trade receivable balance is fairly stated and why? | 20 marks c. Briefly explain the relationship between the risk of over-reliance and the amount of audit evidence gathered 1 2 marks