Calculate the point estimate, the computed precision interval, the confidence inter- val, and the confidence limits for the population. Label each calculation.

In auditing the valuation of inventory, the auditor, Claudette Perrier, decided to use difference estimation. She decided to select an unrestricted random sample of 80 inventory items from a population of 1,840 that had a book value of $175,820. Perrier
decided in advance that she was willing to accept a maximum misstatement in the population of $6,000 at an ARIA of 5 percent. There were eight misstatements in the sample, which were as follows:
Audit Value Book Value Sample Misstatements
$ 812.50 $ 740.50 $(72.00)
12.50 78.20 65.70
10.00 51.10 41.10
25.40 61.50 36.10
600.10 651.90 51.80
.12 0 (.12)
51.06 81.06 30.00
83.11 104.22 21.11
Total $1,594.79 $1,768.48 $173.69
Required
*Based on AICPA question paper, American Institute of Certified Public Accountants.
Chapter 17 / AUDIT SAMPLING FOR TESTS OF DETAILS OF BALANCES 613
a. Calculate the point estimate, the computed precision interval, the confidence inter-
val, and the confidence limits for the population. Label each calculation.
b. Should Perrier accept the book value of the population? Explain.
c. What options are available to her at this point?

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