Enter the population, paste the sample items with their book and audited values, and set tolerable misstatement. The tool projects the errors in the sample to the whole population by two common methods, adds any misstatement already found elsewhere, and shows how that compares with your tolerable misstatement.
Paste from Excel or CSV. Overstatement is book value above audited value. Understatement shows as a negative error.
Population value should exclude any items you tested in full. Enter tolerable misstatement from your own materiality work. Remove from the sample any error you have judged an anomaly, and say so in your working paper.
| Item | Book | Audited | Error |
|---|---|---|---|
| D-103 | 3,10,000.00 | 2,95,000.00 | 15,000.00 |
| D-106 | 72,000.00 | 76,000.00 | -4,000.00 |
| D-109 | 2,65,000.00 | 2,50,000.00 | 15,000.00 |
The projected figure is a point estimate. Sampling risk means the true misstatement can be higher or lower. When the projection is close to tolerable misstatement, consider extending the sample or asking for correction. Your sampling method and the current standards decide the conclusion.
A sample is tested to learn about everything that was not tested. If the sample shows an error rate, the same rate probably applies to the rest, and the projected figure is your best estimate of the misstatement in the population. Compare it, together with misstatements found elsewhere, to tolerable misstatement. Then decide whether to accept, extend the sample or ask management to correct.
Each sample item has an error, which is its book value less its audited value. The errors are added up for the sample.
The ratio method divides the net error by the book value of the sample and multiplies by the population value. The average difference method divides the net error by the number of sample items and multiplies by the number of items in the population.
Misstatement you found outside the sample is added to each projection. The total is compared with your tolerable misstatement to show the room left or the excess.
Ten items with a book value of 13,82,000 show a net error of 26,000 in a population of 1,25,00,000 with 400 items.
