(Objectives 15-5, 15-7) The following questions concern the determination of the proper sa...

(Objectives 15-5, 15-7) The following questions concern the determination of the proper sample size in audit sampling using the following table:

a. Assume that the initial sample size for column 1 using nonstatistical sampling is 90 items. For each of columns 2 through 7, use your judgment to decide the appropriate nonstatistical sample size. In deciding each sample size, consider the effects of changes in each of the four factors (ARO, TER, EPER, and population size) compared with column 1.

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b. For each of the columns numbered 1 through 7, determine the initial sample size needed to satisfy the auditor’s requirements using attributes sampling from the appropriate part of Table 15-8 (p. 502).

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c. Using your understanding of the relationship between the following factors and sample size, state the effect on the initial sample size (increase or decrease) of changing each of the following factors while the other three are held constant:

(1) An increase in ARO

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(2) An increase in the TER

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(3) An increase in the EPER

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(4) An increase in the population size

d. Explain why there is such a large difference in the sample sizes for columns 3 and 6.

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e. Compare your answers in part

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c. with the results you determined in part a. (nonstatistical sampling) or part b. (attributes sampling). Which of the four factors appears to have the greatest effect on the initial sample size? Which one appears to have the least effect?

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f. Why is the sample size called the initial sample size?

TABLE 15-8 Determining Sample Size for Attributes Sampling*

Objective 15-7

Use attributes sampling in tests of controls and substantive tests of transactions.

Objective 15-5

Use nonstatistical sampling in tests of controls and substantive tests of transactions.