An auditor tests a sample of receivables balances with a total value of £50,000 from a population of £800,000. Misstatements found in the sample total £1,500. Using ratio projection, what is the projected misstatement for the population?

Correct answer: D) £24,000

Explanation

Misstatement rate = £1,500 / £50,000 = 3%. Projected misstatement = 3% x £800,000 = £24,000. £1,500 is only the actual misstatement found and ignores the untested items. £22,500 applies the rate to the untested £750,000 only and omits the misstatement already found in the sample.