Problem

Attributes Sampling with IDEA: Evaluating Sample Results. Based on a population size of 38...

Attributes Sampling with IDEA: Evaluating Sample Results. Based on a population size of 388 shipments, a 10 percent desired risk of overreliance, an expected population deviation rate of 1 percent, and a tolerable rate of deviation of 6 percent, the audit team selected a sample of 58 items.

In performing tests of controls, your audit team identified three shipments that were not supported by an approved sales order and concluded that these represent deviations from the control activity.

Required:

a. Use IDEA to determine the ULRD. What would the audit team’s conclusion be with respect to the functioning of ELM’s control over the authorization of sales transactions?


Part (b) is a set of independent scenarios that affect the evaluation of sample results.

b. For each of the following numbers of deviations, use IDEA to determine the ULRD and provide the audit team’s conclusion with respect to the functioning of ELM’s control over the authorization of sales transactions.

1. 0 deviations.

2. 1 deviations.

3. 2 deviations.

c. How do the results in part (b) reflect the relationship between the number of deviations and the ULRD?

Step-by-Step Solution

Request Professional Solution

Request Solution!

We need at least 10 more requests to produce the solution.

0 / 10 have requested this problem solution

The more requests, the faster the answer.

Request! (Login Required)


All students who have requested the solution will be notified once they are available.
Add your Solution
Textbook Solutions and Answers Search