Evaluate the results of the nonstatistical sample. Consider both the direct implica- tions of the misstatements found and the effect of using a sample.

You have just completed the accounts receivable confirmation process in the audit of Danforth Paper Company, a paper supplier to retail shops and commercial users. Following are the data related to this process:
Accounts receivable recorded balance $ 2,760,000
Number of accounts 7,320
A nonstatistical sample was taken as follows:
All accounts over $10,000 (23 accounts) $ 465,000
77 accounts under $10,000 $ 81,500
Tolerable misstatement for the confirmation test $ 100,000
Inherent and control risk are both high
No relevant substantive analytical procedures were performed
The following are the results of the confirmation procedures:
Recorded Value Audited Value
Items over $10,000 $ 465,000 $ 432,000
Items under $10,000 81,500 77,150
Individual misstatements for items
under $10,000:
Item 12 5,120 4,820
Item 19 485 385
Item 33 1,250 250
Item 35 3,975 3,875
Item 51 1,850 1,825
Item 59 4,200 3,780
Item 74 2,405 0
a. Evaluate the results of the nonstatistical sample. Consider both the direct implica-
tions of the misstatements found and the effect of using a sample.
b. Assume that the sample was a PPS sample. Evaluate the results using monetary unit
sampling.

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