22-PS-Using the Proportionate Extrapolation Workbook AS2 V12

7/25/2019 22-PS-Using the Proportionate Extrapolation Workbook AS2 V12

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The Field Senior Experience AS/2

Performance SupportUsing the Proportionate

Extrapolation Workbook

We often find errors or misstatements in our audits. When we have used audit sampling in a testof details and we find a misstatement, since it was a sample that was used, we need to determine

the proale misstatement in the total population. This is what we call projecting a

misstatement over a population.

This performance support will help !ou determine the extent of misstatement in a population !

detailing "e! concepts in misstatement pro#ection and wal"ing !ou through an example using the

$roportionate Extrapolation Wor"oo", a tool availale in audit pac"s to help !ou determine the

extent of misstatements.

Note% An alternative wor"ing paper that can e used is the Summar! Evaluation of Errors

Wor"oo". &t is important to discuss with !our audit manager on the preferred wor"oo" to eutili'ed in memer firms to document the proale misstatement in the total population.

For more information on misstatements, refer to $erformance Support(What )ou Should *o

with +isstatements Found.

This performance support will cover the following topics clic" on a lin" to go to the topic-%

SEA0&1

1W A0E )13 41&4 T1 *ETE0+&E TE &+$AT 1F TESE

+&SSTATE+ETS 1 TE ET&0E $1$35AT&16

o Step 7% Enter Sample $arameters

o Step 2% Enter +isstatements *etected and Entit! Ad#ustments

o Step 8% 0eview the 0esults

o Step 9% *ocument )our Wor"

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S%E&'()*

As !ou audit accounts receivale for a ris" of material misstatement relating to valuation

+aterialit! of 8::,::: and $erformance materialit! of 7;:,:::- at 4eorge


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This is a tool !ou ma! use when !ou identif! factual misstatements in an audit sample when

testing for overstatement. This wor"oo" helps !ou determines the amount of pro#ected

misstatement in the population !ou are testing.

The $roportionate Extrapolation Wor"oo" is laid out so that ever!thing !ou need is visile and

can e easil! traced from one part to another. &t is organi'ed into three ma#or sections%

7- Sample $arameters items to input-

2- 0esults

8- +isstatements *etected

2000-2012 eloitte !lobal Ser"ices #imite$Partners in #earning


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elow !ou will find the general instructions on completing the $roportionate Extrapolation

Wor"oo". owever, !ou ma! need further information depending on the results of !our

evaluation. Additional guidance is provided in the first ta, BhelpCD refer to this at an! time.

,tep - .nter ,ample arameters

egin ! entering the information aout the sample !ou tested in the first section, as shown in

Figure 7. )ou are onl! reuired to populate the white cells in the document.

!igure -

2000-2012 eloitte !lobal Ser"ices #imite$Partners in #earning


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,tep 0- .nter "isstatements Detected and .ntit 1djustments

The next step is to go to the B+isstatements *etectedC section and follow the instructions as

shown elow. Figure 2 depicts the populated +isstatements *etected. Again, !ou will onl!

complete the white fields, and the shaded fields are calculated ased on the misstatement

recorded.

Enter a working paper reference, tickmark, or item IDto indicate where the misstatement

is found in our wor"ing papers. This will assist the reviewer i.e., audit manager- in

"nowing where the misstatement is coming from when reviewing !our wor".

Then enter therecorded value and audited value as positive amounts for the misstatement

identified.

&f management has ad#usted a misstatement, enter the ad#ustment in the last column,

Entity Corrections.

!igure 0-

,tep 2- 3evie t'e 3esults

ow that !ou have entered all the misstatements !ou found in !our audit sample, !ou can see

what these mean to the population as a whole in the B0esultsC section of the wor"sheet.



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!igure 2-

1nce !ou have evaluated the results and completed further wor", where pro#ected misstatements

exceeds the gap etween materialit! and performance materialit!, then transfer the misstatements

identified to wor"ing paper 289:, the Evaluation of +isstatements and *isclosures.

,tep 4- Document our or5

)our next step is to document in !our wor"ing papers and advise !our field senior of material

misstatements !ou identified. Ensure !ou have performed the following steps%

Save the $roportionate Extrapolation Wor"oo" in the AS/2 audit file and signoff on it

once completed and read! for review. This is documentation of !our calculations.

4ive the wor"oo" an appropriate index reference and name e.g. >8>: $roportionate

Extrapolation Wor"oo"GAccounts 0eceivale onfirmations-.

*ocument proposed entries in the wor"ing papers where !ou did !our audit testing to

address the ris" identified.

For general guidance on audit documentation, refer to the *TT5 Audit Approach +anual Topic

$:2: $repare and ontrol Audit *ocumentation.


Documents

22-PS-Using the Proportionate Extrapolation Workbook AS2 V12