Question

In performing tests of controls over purchase orders, which statistical sampling methods would be most appropriate?

Answer 1

Answer )

Here I feel the attribute sampling will be the best sampling for performing test of controls over purchase orders as it is mostly used by auditor for to test the efficiency of controls in preventing, detecting and correcting the material misstatement.

For example, day the auditor want to check purchases over $30 and when there is no chance of checking all purchase orders he may select a sample and set a tolerable rate say 2%. Here if pouches orders without appropriate authorization in that sample is more than the tolerable rate then the auditor concludes that operating effectiveness of controls are not effective.