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1、Audit Objective: Determine if inventory balance significantly overstated.Sampling approach to use? Audit Objective: Determine if 100% compliance with policy exists.Sampling approach to use? Audit Objective: Determining opinions of employees about current health plan.Sampling considerations re: popul
2、ation? Audit Objective: Estimating average account balances.Type of sampling approach to use?Audit Objective: Confirm receivable balances; excellent internal controls.Sampling approach to use? Conclusion that can be drawn? Audit Objective: Audit invoices for approvals; several paying offices located
3、 throughout city.Sampling method to use?Audit Objective: Evaluating 100 invoices for approvals from population of 5000 found 10 errors using a 95% CL and Precision of 2%; calculated n mean of 50 and n standard deviation of 20.What is the SE of the Mean (standard deviation of the distribution of samp
4、le means)? What was the precision? Audit Objective: Estimate average weight of cows on dude ranch.What method would be used to determine estimate?Audit Objective: Determine if freight claims processed correctly within tolerances set by management.What type of sampling plan would be used?Audit Object
5、ive: Determine inventory shrinkage where significant differences exist between individual item values.What consideration should be given to evaluating the inventory? Audit Objective: Determine the average of accounts payable balances.If the sample mean was $150 with a precision of +/- $20 at a 95% c
6、onfidence level, what true population mean would be expected in a subsequent sample? Audit Objective: Estimate the value of inventory. Established a 95% Confidence Level, took a sample of 100 items, calculated Standard Deviation of $200. What precision interval was achieved?What is the estimated val
7、ue of the inventory? Audit Objective: Determine if any fraudulent purchase orders exist.What sampling plan would be most appropriate? Audit Objective: Perform annual audit of payroll; dont expect to find problems.What sampling plan may be appropriate?Audit Objective: Determine accuracy of accounts r
8、eceivable balance using PPS with a systematic sampling approach.What is a possible disadvantage of using systematic sampling?Audit Objective: Audit cash disbursements using judgmental approach.What is the major difference between judgmental and statistical sampling?Audit Objective: Determine if paya
9、bles are correctly stated on the financial statements.Would PPS sampling technique be appropriate? Audit Objective: Audit claims for accuracy. Claims not numbered; filed by month paid.What possible technique should be used to select claims? Audit Objective: Estimate inventory value based upon cost a
10、verages.Which sampling plan may be appropriate?Audit Objective: Determining value of property and equipment on general ledger using statistical sampling approach.What does confidence level represent? What does precision represent? Audit Objective: Determine value of equipment.What are alpha risks an
11、d how are they controlled by the auditor? What are beta risks and how are they controlled? Audit Objective: Determine accuracy of physical inventory via test counts.What action should be taken if test count results are outside the precision interval? How would additional sample size be determined to
12、 achieve desired precision limits of plus or minus 5% around the sample mean? Audit Objective: Evaluate evidence of sample.How should sample evidence be evaluated? Audit Objective: Determine if fictitious sales exist.What sampling plan would be used? What conclusion could be made if no fictitious sa
13、les were found with a 99% Confidence Level and a Maximum Tolerable Error Rate of .5%? Audit Objective: Select a sampling technique that can be used for both compliance and substantive testing.What sampling plan can be used for both compliance and substantive testing? ANSWERS:Audit Objective: Determi
14、ne if inventory balance significantly overstated.Sampling approach to use? (PPS)Audit Objective: Determine if 100% compliance with policy exists.Sampling approach to use? (Discovery)Audit Objective: Determining opinions of employees about current health plan.Sampling considerations re: population? (
15、Stratify N: male & female; marital status; hourly vs. salaried)Audit Objective: Estimating average account balances.Type of sampling approach to use? (Variable)Audit Objective: Confirm receivable balances; excellent internal controls.Sampling approach to use?(Discovery)Conclusion that can be drawn?
16、(95% probability actual rate of occurrence in N is less than critical rate if no exceptions found)Audit Objective: Audit invoices for approvals; several paying offices located throughout city.Sampling method to use? (Cluster Sampling Approach)Audit Objective: Evaluating 100 invoices for approvals fr
17、om population of 5000 found 10 errors using a 95% CL and Precision of 2%; calculated n mean of 50 and n standard deviation of 20.What is the SE of the Mean (standard deviation of the distribution of sample means)? (10) (20/square root 100=10)What was the precision? (5.8%)Psquared=(CL coefficient squ
18、ared) x (success) x (failure) / nPsquared = (1.96 squared) x (90/100) x (10/100) / 100Psquared = .0034P = square root .0034P = 5.8%(Attribute Formula: n = (Csquared) pq / Precision squaredAudit Objective: Estimate average weight of cows on dude ranch.What method would be used to determine estimate?(
19、Mean Per Unit)Audit Objective: Determine if freight claims processed correctly within tolerances set by management.What type of sampling plan would be used? (Attributes)Audit Objective: Determine inventory shrinkage where significant differences exist between individual item values.What consideratio
20、n should be given to evaluating the inventory? (Stratify)Audit Objective: Determine the average of accounts payable balances.If the sample mean was $150 with a precision of +/- $20 at a 95% confidence level, what true population mean would be expected in a subsequent sample? (Within $130 to $170, 95
21、% of the time).Audit Objective: Estimate the value of inventory. Established a 95% Confidence Level, took a sample of 100 items, calculated Standard Deviation of $200. What precision interval was achieved? (+/- $39)1.96 x $200 / square root 100 = 39What is the estimated value of the inventory? (Mean
22、 value calculated +/- $39)Audit Objective: Determine if any fraudulent purchase orders exist.What sampling plan would be most appropriate? (Discovery)Audit Objective: Perform annual audit of payroll; dont expect to find problems.What sampling plan may be appropriate? (Stop-Or-Go)Audit Objective: Det
23、ermine accuracy of accounts receivable balance using PPS with a systematic sampling approach.What is a possible disadvantage of using systematic sampling? (items in N may be in systematic pattern, thereby negating randomness of n).Audit Objective: Audit cash disbursements using judgmental approach.W
24、hat is the major difference between judgmental and statistical sampling? (Cannot measure risk of being wrong with judgmental sampling).Audit Objective: Determine if payables are correctly stated on the financial statements.Would PPS sampling technique be appropriate? (No)Audit Objective: Audit claim
25、s for accuracy. Claims not numbered; filed by month paid.What possible technique should be used to select claims? (Systematic interval with two or more random starts to prevent bias due to filing procedures, etc.).Audit Objective: Estimate inventory value based upon cost averages.Which sampling plan
26、 may be appropriate? (Mean Per Unit)Audit Objective: Determining value of property and equipment on general ledger using statistical sampling approach.What does confidence level represent? (Probability mean will fall within defined range of values)What does precision represent? (Range where audited
27、value must fall to be acceptable)Audit Objective: Determine value of equipment.What are alpha risks and how are they controlled by the auditor? (Incorrect rejection of balance that is correct; controlled via confidence levels established).What are beta risks and how are they controlled? (Incorrect a
28、cceptance of balance that is not correct; control via precision).Audit Objective: Determine accuracy of physical inventory via test counts.What action should be taken if test count results are outside the precision interval? (Look for errors made by warehouse staff; analyze differences for explanati
29、ons; ensure sample was representative of N).How would additional sample size be determined to achieve desired precision limits of plus or minus 5% around the sample mean? (Calculate desired precision: 5% of sample mean; formula to calculate n: desired precision = Confidence Coefficient x Sample Stan
30、dard deviation / square root n).Audit Objective: Evaluate evidence of sample.How should sample evidence be evaluated? (Qualitatively analyze errors, apply professional judgement; quantitatively calculate UPL and compare to acceptable UPL, etc.).Audit Objective: Determine if fictitious sales exist.Wh
31、at sampling plan would be used? (Discovery)What conclusion could be made if no fictitious sales were found with a 99% Confidence Level and a Maximum Tolerable Error Rate of .5%? (99% confident that if fictitious sales exist the actual rate of occurrence is less than .5%).Audit Objective: Select a sa
32、mpling technique that can be used for both compliance and substantive testing.What sampling plan can be used for both compliance and substantive testing? (DUS/PPS relies on an attribute sampling approach to express conclusion in $ rather than as a deviation rate; use DUS to select account, then review details for attribute testing.).