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Recorded Confirmation
Value Response Misstatement
Acct. 147 24,692$ 22,486$ 2,206$ Pricing error
Acct. 228 183,219 157,216 26,003 Cutoff error
Acct. 278 7,546 5,546 - Timing difference
Acct. 497 15,319 - - Timing difference
Acct. 564 8,397 7,858 539 Error in quantity shipped
Acct. 653 32,687 19,328 13,359 Cutoff error
Acct. 830 5,286 - 5,286 Cutoff error
Total misstatement 47,393$
Sample Sample Book Projected
Value Misstatements Value Misstatement
Stratum 1 $1,287,643 $26,003 $1,287,643 $26,003
Stratum 2 1,349,678 15,565 4,348,268 50,146
Stratum 3 94,637 5,825 947,682 58,331
Totals $2,731,958 $47,393 $6,583,593 $134,480
The population is not acceptable since the projected misstatement of $134,480 exceeds
tolerable misstatement of $100,000 even before consideration of sampling risk. The auditor
is likely to propose an adjustment for the actual errors detected and increase testing. In this
situation, many of the errors involved cutoff, so the auditor could expand testing in this
area. Because the cutoff errors were separated from other errors and testing expanded in
this area, the cutoff errors would not be included in the projection of error for each stratum.
