J. Pitino is auditing the revenue cycle of Texas Boots and has elected to perform a nonstatistical test of controls. Texas Boots sells Snakeskin Boots to wholesale distributors around the country. Pitino does not expect more than 1% deviations to be present in the system. A tolerable rate of deviation would be 5%. Pitino has assessed control risk as medium low and selected a sample size of 40 sales and has defined a deviation as a recorded sale not being supported by a shipping document.
Required:
A. How does nonstatistical sampling differ from statistical sampling?
B. Why would Pitino choose to perform nonstatistical sampling instead of statistical sampling?
C. How should Pitino select the sample?
D. What conclusion should Pitino draw if one deviation is found?
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