Question

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Chapter 8 An auditor is applying statistical sampling for attributes to the testing of extensions of 1000 line items on sales invoices. Ade iation is defined as an extension mistake on a line Le line #39 quantity of 10 and unit price of $100 is calculated as $900). The auditor decides to use a 10% Risk of Overreliance, a Tolerable Deviation Rate of 6%, and an expected population deviation rate of 2%. (idole) and an Assume the following deviation condition exists in the population (the auditor would not know this): Amount of deviation overstated (understated) Line # 39 114 202 s (100) 226 900 700 950 220 240 291 347 410 226 (400) 550 1000 150 (500) 350 925 (820) 526 600 674 798 840 890 906 Required a. Calculate the sample size. 6 b. Take ONE sample using random selection. Regardless of your answer to part "a", use a sample size of 100 lines. If you select a line number listed in the preceding deviation table, assume that a deviation is found. c. Quantitatively evaluate your sample results. [Use the "sample decision rule". d. A ssume that your sample contains so many deviations that you as the auditor conclude that controls are not acceptable. Develop a "population decision rule", as s decision rule to conclude that controls would be acceptable in this case uggested in class. Use the population e. Strictly as an overall Test of Controls, would the dollar amount of the deviations you found change the evaluation of your results? Why or why not?

Answer 1