PPS – difference between Becker and Wiley

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  • #183971
    OneStep
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    There is a difference in the calculation of the Upper Limit on Misstatements (ULM) between Becker and Wiley.

    Which one to use on the test?

    Wiley:

    ULM = Projected misstatement + Basic Precision + Allowance for projected misttatement

    And to make your decision you compare ULM to Tolerable Misstatement (TM)

    Becker:

    Becker compares Projected Misstatement to Tolerable Misstatement but Projected Misstatement in Becker is not the same concept as in Wiley and is calculated differently (similar to ULM though).

    Known Misstatement (sample errors) + Projected error (identical to Projected Misstatement in Wiley) + Allowance for sampling risk = Projected Misstatement

    To me it looks like Becker substitutes Basic precision with Known Misstatements (which is the difference between Book value and Audit value).

    My test is tomorrow and I just noticed this. If I have to compare the upper limit of misstatements to the tolerable rate, which formula should I use?

    I graduated in 2012 but I remember from my Audit class in grad school that we used the same formula that Wiley uses.

    I dont ever remember using the Known Misstatements (the difference between recorded amount and audited amount).

    Please help!! I can clarify more if it s not clear what i m asking.

    Thanks a lot!

    FAR - Apr 2013 - PASSED
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  • #519865
    OneStep
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    bump!

    FAR - Apr 2013 - PASSED
    REG - Oct 2013 - PASSED
    AUD - Apr 2014 - PASSED
    BEC - May 2014 - PASSED

    #519894
    OneStep
    Member

    bump!

    FAR - Apr 2013 - PASSED
    REG - Oct 2013 - PASSED
    AUD - Apr 2014 - PASSED
    BEC - May 2014 - PASSED

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