| Course | AC410 Auditing |
|---|---|
| Unit | Unit 9 |
| Paper type | Evidence evaluation memo |
| Length | About 1,070 words, 6 pages double-spaced |
| Format | APA 7 student paper |
| School | Purdue University Global |
| Program | BS in Accounting |
| Updated | October 2026 |
Free sample paper for AC410 Unit 9
A Bench Test Against Two Years of Claims: A Unit 9 Evidence Evaluation Memo on a Stair Lift Warranty Rate
[Student Name]
Purdue University Global
AC410: Auditing
Unit 9 Evidence Evaluation Memo
[Instructor Name]
[Date]
Hallcroft Lifts, its supplier and every figure are composite; the standard, textbook and studies cited are real.
Header
To: Hallcroft Lifts engagement partner From: Senior on the Hallcroft engagement Date: February 18 Subject: Whether the 2.1 percent warranty claim rate is supported
The Question
Management's reserve of $1,010,000 at December 31 applies a claim rate of 2.1 percent of lifts under warranty, down from 2.9 percent a year earlier. Management attributes the change to the drive motor fitted to all lifts sold since mid-2023. Because the Unit 4 walkthrough found that the controller's review of this assumption did not operate, the team has tested it entirely through its own procedures. The question is whether the evidence supports 2.1 percent and, if not, what figure it does support.
Evidence Considered
Each item gives its source, what it shows, and its weight for reliability and relevance.
1. Supplier's accelerated life test report. Source: the motor supplier. Shows 40 percent fewer failures than the old motor over a simulated five years of use. Reliability moderate: outside the client, but prepared by a party that sells the motor to Hallcroft. Relevance low to moderate: laboratory cycles at constant load, not stairs in homes with pets, dust and irregular use.
2. Field claims for new-motor lifts in their first two years of service. Source: the warranty module, whose conversion the team reconciled under program procedure 2. Shows an annual claim rate of 1.9 percent. Reliability high. Relevance moderate: only young lifts.
3. Field claims for old-motor lifts in their first two years. Same source. Shows 2.0 percent. Reliability high. Relevance high, because it is the age-matched comparison for item 2.
4. Field claims for old-motor lifts in years three to five. Same source. Shows annual rates of 3.6 to 4.1 percent. Reliability high. Relevance high: failures rise with age, and no new-motor lift has reached year three.
5. The operations vice president's email. Source: management. Two lines stating that dealers report fewer failures. Reliability low: an interested party, no data attached. Relevance low.
6. Claims paid in January and February. Source: warranty module and cash disbursements, traced to dealer credits. Annualized, they run at 2.7 percent of lifts under warranty. Reliability high. Relevance high: actual claims against the year-end population.
7. Technical services repair log. Source: the technical services manager. Shows that the most common new-motor failure code is a gearbox seal leak, the same code that drove old-motor claims from year three onward. Reliability moderate. Relevance high as an explanation of item 4.
Weighing the Conflict
Items 1, 2 and 5 support a lower rate; items 3, 4, 6 and 7 do not. Read together, items 2 and 3 matter most: at the same age, new and old motors fail at nearly the same rate, 1.9 against 2.0 percent. The lower figure in item 2 is mostly a matter of age, not design.
The bench test is the most precise number in the file and the least relevant one, because it measures a motor running in a laboratory while the reserve has to cover motors aging on real staircases.
Research has found that auditors tend to give more weight to highly quantified evidence, such as model outputs, than to less quantified evidence even when the latter is more relevant (Joe et al., 2017). The supplier's 40 percent figure invites exactly that error. The standard on estimates requires the team to weigh evidence that contradicts management's assumptions as well as evidence that supports them, and to consider whether management's choices indicate bias (American Institute of Certified Public Accountants, 2020). The vice president's bonus depends on gross margin, and each step down in the claim rate raises it.
Independent Range
The team applied age-specific claim rates from items 3 and 4 to each year of sales still under warranty, using the old motor's history for all lifts because the new motor has not yet shown a different pattern at any age it has reached. Allowing for some improvement in later years, which item 1 makes possible though not proven, the supported range for the blended rate is 2.6 to 3.0 percent, with a point estimate of 2.8 percent. Item 6 falls inside that range. The reserve has two parts: $406,250 for claims already reported but not yet credited, which does not depend on the rate, and a forward estimate that moves by $28,750 for each tenth of a point.
1. Reserve at 2.6 percent: $1,154,000.
2. Reserve at 2.8 percent: $1,211,000.
3. Reserve at 3.0 percent: $1,269,000.
4. Management's reserve at 2.1 percent: $1,010,000.
Because management's figure lies outside the range, the misstatement is at least the distance to the nearest end of it, $144,000. That exceeds overall materiality of $96,000 and the specific materiality of $60,000 set for the reserve. Developing an independent estimate rather than reviewing management's process is the response the textbook recommends where an estimate carries significant risk and controls cannot be relied on (Arens et al., 2020).
What Would Settle It
1. Year-three claims for the first new-motor lifts, sold in mid-2023, which the July claims run will show. If they stay near 2 percent while old motors rose above 3.5 percent at that age, management's view gains real support.
2. The supplier's field return data from other lift makers using the same motor, requested through Hallcroft.
3. A review of the gearbox seal failure mode by an engineer engaged by the firm, whose work the team would evaluate under the standard on using an auditor's specialist.
4. The supply contract. If the supplier reimburses Hallcroft for motor failures, that recovery would be evaluated as a separate asset, not netted against the reserve.
Conclusion
The 2.1 percent rate is not supported by sufficient appropriate evidence. The team will propose increasing the reserve by $144,000 to $1,154,000, the low end of the supported range, and will discuss the proposal with the chief executive and the controller this week. If management declines, the amount goes onto the summary of uncorrected misstatements and must be considered in forming the opinion. Griffith et al. (2015) found that auditors often audit complex estimates by verifying management's numbers; this memo instead tests the assumption against the client's own claims history.
References
American Institute of Certified Public Accountants. (2020). Statement on Auditing Standards No. 143: Auditing accounting estimates and related disclosures. AICPA.
Arens, A. A., Elder, R. J., Beasley, M. S., & Hogan, C. E. (2020). Auditing and assurance services (17th ed.). Pearson.
Griffith, E. E., Hammersley, J. S., & Kadous, K. (2015). Audits of complex estimates as verification of management numbers: How institutional pressures shape practice. Contemporary Accounting Research, 32(3), 833-863. https://doi.org/10.1111/1911-3846.12104
Joe, J. R., Vandervelde, S. D., & Wu, Y.-J. (2017). Use of high quantification evidence in fair value audits: Do auditors stay in their comfort zone? The Accounting Review, 92(5), 89-116. https://doi.org/10.2308/accr-51662
Reading the AC 410 Unit 9 instructions
Unit 9 of AC410 asks for a memo that weighs conflicting evidence and reaches a supported conclusion. State the question precisely, including the recorded figure and management's reason for it. List each item of evidence with its source, what it shows and how much weight it deserves for reliability and for relevance, judged separately. Explain how the items conflict and which ones decide the matter, and why. Watch for evidence that looks persuasive because it is precise but measures the wrong thing. Consider management bias. Where the evidence supports a different figure, develop an independent range and measure any misstatement correctly against it. Then say what further evidence would settle the question and when it will exist. Conclude with the proposed adjustment. Cite the AICPA standard on estimates, the textbook and studies in APA 7.
How the AC 410 Unit 9 example is put together
The header addresses the engagement partner and frames the subject as a single question. The question section states the $1,010,000 reserve and management's new-motor reason. Seven numbered evidence items follow, each rated for reliability and relevance, from the supplier's laboratory test to the January and February claims and the repair log's gearbox seal code. The weighing section pairs items 2 and 3 to show that age, not design, explains the lower rate. The highlighted sentence calls the bench test the most precise and least relevant number in the file, and Joe and colleagues' research on quantified evidence supports the point. An independent range section explains the reserve's two parts and lists four figures. Four sources that would settle the question and a conclusion proposing $1,154,000 close the memo.
Reading the AC410 Unit 9 grading rubric
AC410 evidence memos are graded on the quality of the weighing, not the length of the list. Each item should be rated for reliability and relevance separately, since a reliable source can still be irrelevant to the question. The memo must identify which items conflict and explain which ones decide the matter. Recognizing that precise, quantified evidence can mislead earns high credit. Management incentives should be considered as part of evaluating an estimate. Where an independent range is developed, its basis must be explained and the misstatement measured to the nearest end of the range, not the point estimate. Naming specific further evidence, with timing, shows judgment about what would resolve the doubt. The conclusion must follow from the analysis. Purdue Global also expects memo format and APA 7 citations to the estimates standard.
AC410 Unit 9 help: mistakes that cost points
Unit 9 memos often list evidence without weighing it, leaving the reader to decide. Reliability and relevance are merged, so a supplier's report counts as strong simply because it comes from outside. The precise-looking number wins by default. Management's incentive is not mentioned. The misstatement is measured to the auditor's point estimate, which overstates what the evidence proves. Further evidence is described as "more testing" without saying what or when. The conclusion hedges and proposes nothing. If your case weighs conflicting evidence on a receivable, an inventory valuation or a legal claim, our team can build the list, the weighing and the conclusion from your facts.
Get an AC410 Unit 9 example written to your instructions
List the evidence items your Unit 9 case presents and the balance or matter they concern, then send them with the rubric. The memo weighs each for reliability and relevance, reaches a supported conclusion and names what would settle the rest, within 24-48h. A first custom sample costs you nothing. The paper above is an original model document written by our desk, not a submitted student paper and not an official Purdue University Global document.
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AC410 Unit 9 questions, answered
What makes one piece of evidence more reliable than another?
The auditing standards describe tendencies rather than rules: evidence from independent outside sources is generally more reliable than evidence from the client, documentary evidence more than oral, and evidence the auditor obtains directly more than evidence obtained indirectly. The sample applies these to each item in its table and explains where an item's relevance, not its source, limits its weight.
Where can I find a free AC410 Unit 9 sample paper?
This page holds a complete AC410 Unit 9 evidence evaluation memo on a composite stair lift maker's warranty claim rate, with seven rated items, the weighing, an independent range, further evidence and APA 7 references.
Why does the supplier's bench test carry little weight in AC410 Unit 9?
It comes from a party that sells the motor, and it measures motors under constant laboratory load rather than on staircases in homes. Its 40 percent figure is precise but answers a different question from the reserve's.
How is the $144,000 misstatement in AC410 Unit 9 measured?
Management's $1,010,000 lies below the supported range of $1,154,000 to $1,269,000, so the misstatement is the distance to the nearest end of that range, not to the $1,211,000 point estimate.
What would settle the claim rate question in AC410 Unit 9?
Year-three claims for the first new-motor lifts, due in the July claims run; the supplier's field data from other lift makers; an engineer's review of the gearbox seal; and the supply contract's terms on reimbursement.