Economics · Auditing
An audit manager reviewed the results of a test based on statistical sampling, which covered 20% of the payables balance. The results indicate a total error of $45,000 in the sample: $20,000 due to cutoff errors (invoices not recorded in the correct period) resulting from weak controls, and a one-off error of $25,000 made by a temporary clerk. What is the appropriate course of action based on these results?
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1A different sample should be selected as these results are not reflective of the population
- 2Poppy Co. should be asked to adjust the payables figure by $45,000
- 3The effect of the control error should be projected across the whole population✓
- 4The error is immaterial and therefore no further work is required
Correct answer
The effect of the control error should be projected across the whole population
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