(Objectives 17-2, 17-3, 17-4, 17-5) An audit partner is developing an office training program to familiarize her professional staff with audit sampling decision models applicable to the audit of dollar-value balances. She wishes to demonstrate the relationship of sample sizes to population size and estimated population exception rate and the auditor’s specifications as to tolerable misstatement and ARIA. The partner prepared the following table to show comparative population characteristics and audit specifications of the two populations:
| Characteristics of Population 1 Relative to Population 2 | Audit Specifications as to a Sample from Population 1 Relative to a Sample from Population 2 | ||
Size | Estimated Population Exception Rate | Tolerable Misstatement | ARIA | |
Case 1 | Equal | Equal | Equal | Lower |
Case 2 | Smaller | Smaller | Equal | Higher |
Case 3 | Larger | Equal | Equal | Lower |
Case 4 | Equal | Larger | Larger | Equal |
Case 5 | Larger | Equal | Smaller | Higher |
In items (1) through (5) you are to indicate for the specific case from the table the required sample size to be selected from population 1 relative to the sample from population 2.
(1) In case 1, the required sample size from population 1 is ___.
(2) In case 2, the required sample size from population 1 is ___.
(3) In case 3, the required sample size from population 1 is ___.
(4) In case 4, the required sample size from population 1 is ___.
(5) In case 5, the required sample size from population 1 is ___.
Your answer choice should be selected from the following responses:
a. Larger than the required sample size from population 2.
b. Equal to the required sample size from population 2.
c. Smaller than the required sample size from population 2.
d. Indeterminate relative to the required sample size from population 2.*
Objective 17-2
Apply nonstatistical sampling to tests of details of balances.
Objective 17-3
Apply monetary unit sampling.
Objective 17-4
Describe variables sampling.
Objective 17-5
Use difference estimation in tests of details of balances.
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