Assumption Overstatement amounts equal 10 percent; understatement amounts equal 10 percent; misstatement bounds at a 5 percent ARia are Upper misstatement bound=$1, 200,000X 3%X%=$3, 600 Lower misstatement bound =$1.200000X 3%X10%=S3.600 The assumption is that, on average those items that are misstated are misstated by no more than 10 percent. Arens, Loeb becke: Auditing &/E C 2000 by Prentice Hall,Inc.Arens, Loebbecke; Auditing, 8/E © 2000 by Prentice Hall, Inc. Overstatement amounts equal 10 percent; understatement amounts equal 10 percent; misstatement bounds at a 5 percent ARIA are Upper misstatement bound = $1,200,000 X 3% X 10% = $3,600 Lower misstatement bound = $1,200,000 X 3% X 10% = $3,600 The assumption is that, on average, those items that are misstated are misstated by no more than 10 percent