Projected Misstatement: How Sample Errors Affect the Population
Finding one error in a sample does not mean the auditor simply records that one amount and stops; the sample is evidence about the broader population.
Known misstatement
The auditor first identifies the actual misstatement found in the sampled item or items.
Projection
The auditor projects sample misstatement to the population using the sampling method applied.
Evaluation
Projected misstatement, together with sampling risk and other known or likely misstatements, is evaluated against tolerable misstatement and overall materiality considerations.
Exam strategy
Do not compare only the literal dollar errors found in the sample with tolerable misstatement; consider the projected population effect.
The takeaway
Sample errors are projected to estimate the likely population misstatement before the auditor evaluates whether the result is acceptable.
Related Summit resources
FAQ
What is the key distinction?
Sample errors are projected to estimate the likely population misstatement before the auditor evaluates whether the result is acceptable.
What should I identify first?
Finding one error in a sample does not mean the auditor simply records that one amount and stops; the sample is evidence about the broader population.
Why is this tested?
Understand how identified sample misstatements are projected to the population and compared with tolerable misstatement.