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11 likes to open DM, help 😇
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Assuming this is PM and AMPT for my kpmg folks
Chief
PM is an amount by which FS line item can be off and it would still be materially correct.
We set TE at 50 or 75%, depending on error rate we are expecting. This is bc we dont rest 100% but rather on a sample basis. So you use TE to determine sample sizes. Smaller TE will result in more samples which makes sense bc if you are expecting more errors you need to test more samples.
SAD is much smaller amount. We use it to waive on individual differences. Basically any difference below SAD we disregard. But differences above SAD we want to track in our SAD schedule to see if they accumulate to material amount.
There are some nuances to it (i.e. for rep sample you extrapolate differences below SAD bc you are only testing portion of the population so you want to estimate the error rate in the entire population). But this is the logic behind it.
Thank you so much for this!!
On an unrelated note- making acronyms that spell out negative emotions isn’t very bright now is it EY (talking to the firm). I’m getting SAD just reading this and it isn’t even busy season yet
Just going to leave this here