In using difference estimation, an auditor took a random sample of 100 inventory items from a large population to test f
Posted: Thu May 19, 2022 11:40 am
In using difference estimation, an auditor took a random sample
of 100 inventory items from a large population to test for proper
pricing. Several of the inventory items were misstated, but the
combined net amount of the sample misstatement was not material. In
addition, a review of the individual misstatements indicated that
no misstatement was by itself material. As a result, the auditor
did not investigate the misstatements or make a statistical
evaluation. Explain why this practice is improper?
of 100 inventory items from a large population to test for proper
pricing. Several of the inventory items were misstated, but the
combined net amount of the sample misstatement was not material. In
addition, a review of the individual misstatements indicated that
no misstatement was by itself material. As a result, the auditor
did not investigate the misstatements or make a statistical
evaluation. Explain why this practice is improper?