AC741-Week9Slides.pptVIP

* * * * * * * * * The Auditor’s Decision Upper Limit on Misstatements ? Tolerable Misstatement Accept account balance as fairly recorded Upper Limit on Misstatements Tolerable Misstatement Conclude that account balance is not fairly recorded MODG-* Classical Variables Sampling (Evaluating Results) Precision interval has a (1 minus risk of incorrect acceptance) probability of including the true balance Decision If difference between recorded account balance and farthest bound of the precision interval is less than or equal to tolerable misstatement, accept as fairly recor