Question

Given that you wish to construct a variables sampling plan to audit the investments account and...

Given that you wish to construct a variables sampling plan to audit the investments account and have a sampling risk at 5%, you would

Certain that you will catch any discrepancies in the accounts

Is too low a sampling risk making it too inefficient to use sampling

Would be 95% confident that you will discover any discrepancies in the account

You would use attribute sampling not variables sampling to audit the balance in the investment account

Business   Accounting   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

Attribute sampling would be used in this case since it is to audit the balance in the invesment account. It requires the use of a probabilistic sample selection method (random or systematic sampling). Attribute sampling allows the auditor to estimate the proportion of population items containing a specified characteristic.

Variable sampling will not give a complete reliance and further sample size would have to be increased to have a greater level of confidence with a lot of substantives tests.  

We can have a sample size of 59-60 under attribute sampling using the 5% sampling risk.

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
You would like to construct an aggregate production plan for product CT34 for the four quarters...
You would like to construct an aggregate production plan for product CT34 for the four quarters of next year. Cost of regular production = 70 $/u Cost of overtime production = 95 $/u Inventory holding cost = 7 $/u/qtr Cost of increasing production = 80 $/u Cost of decreasing production = 110 $/u The regular production for the last quarter of this year = 1900 u Inventory level at the end of the last quarter of this year = 140...
1. Which of the following would have the greatest chance of resulting in a lawsuit against...
1. Which of the following would have the greatest chance of resulting in a lawsuit against the auditor? A. Incorrect rejection of an account balance B. Incorrect acceptance of an account balance C. A type one error D. Using variables sampling to determine the correct balance in accounts payable 2. An account balance is $300,000 and there are 25 items in the account, six of which have balances that equal or exceed $15,000. The auditor plans to use a monetary-unit...
Using your firm’s sampling technique, you have selected representative sample of Property, Plant and Equipment (PPE)...
Using your firm’s sampling technique, you have selected representative sample of Property, Plant and Equipment (PPE) items from the asset register. You have decided to use this sample to test whether the depreciation rate assigned to PPE is appropriate and in line with the present condition and expected use over the remaining life of each sample item. The relevant details of the sample selection and results of your test are summarised below: Profit before tax $1,875,000 PPE account balance $11,345,000...
Question 5 (5 marks) Using your firm’s sampling technique, you have selected representative sample of Property,...
Question 5 Using your firm’s sampling technique, you have selected representative sample of Property, Plant and Equipment (PPE) items from the asset register. You have decided to use this sample to test whether the depreciation rate assigned to PPE is appropriate and in line with the present condition and expected use over the remaining life of each sample item. The relevant details of the sample selection and results of your test are summarised below: Profit before tax $1,875,000 PPE account...
You are an Audit Senior currently planning the 30 June 20X8 audit of Forest Limited, an...
You are an Audit Senior currently planning the 30 June 20X8 audit of Forest Limited, an Australian-owned company that produces and exports woodchips to Japan. Forest’s operations are located in Eden, on the far south coast of NSW. Timber is purchased from forests nearby, processed into woodchips and immediately stockpiled for export at the company’s shipyards at Twofold Bay. Forest contracts timber cutters to deliver set tonnages of logs to its mill throughout the year. Woodchips are transported to Japan...
You are an Audit Senior currently planning the 30 June 20X8 audit of Forest Limited, an...
You are an Audit Senior currently planning the 30 June 20X8 audit of Forest Limited, an Australian-owned company that produces and exports woodchips to Japan. Forest’s operations are located in Eden, on the far south coast of NSW. Timber is purchased from forests nearby, processed into woodchips and immediately stockpiled for export at the company’s shipyards at Twofold Bay. Forest contracts timber cutters to deliver set tonnages of logs to its mill throughout the year. Woodchips are transported to Japan...
CASE 1 You are the internal audit senior responsible for conducting an assurance engagement of the...
CASE 1 You are the internal audit senior responsible for conducting an assurance engagement of the XYZ Company payroll process. This process has not been audited for three years and, as such, is due in the normal audit cycle. There have been no significant changes since the previous audit, that is, there were no system changes, no reorganization of personnel, and no substantive procedural changes. However, during the last assurance engagement, the internal audit function identified several observations, some of...
IReading the following Internal audit section of the LDC Cloud Systems Case Study: NTERNAL AUDIT CFO...
IReading the following Internal audit section of the LDC Cloud Systems Case Study: NTERNAL AUDIT CFO Arizmendi had hired Scott Tensar during the run-up to the IPO for the purpose of creating and heading the internal audit function, and Tensar had continued to report directly to Arizmendi since that time, with a secondary reporting relationship to the board’s audit committee. Tensar, who was well-qualified for the position, was responsible for providing assurance that LDC’s major risks were being appropriately addressed...
Read the following Internal Audit Section of LDC Cloud Sytems Case study and answer the question:...
Read the following Internal Audit Section of LDC Cloud Sytems Case study and answer the question: INTERNAL AUDIT CFO Arizmendi had hired Scott Tensar during the run-up to the IPO for the purpose of creating and heading the internal audit function, and Tensar had continued to report directly to Arizmendi since that time, with a secondary reporting relationship to the board’s audit committee. Tensar, who was well-qualified for the position, was responsible for providing assurance that LDC’s major risks were...
Background You are a manager in the audit division at Miller Yates Howarth (MYH), an accounting...
Background You are a manager in the audit division at Miller Yates Howarth (MYH), an accounting firm with offices throughout the major regional centres of NSW and Queensland. Although a medium sized firm by national standards, MYH is the second largest regional accounting firm in Australia. Most of MYH’s audit clients are in the agriculture, mining, manufacturing and property industries. All of those industries are currently under pressure, either from a downturn in commodity prices or fierce competition from overseas...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT