Question

An auditor plans to examine a sample of 20 purchase orders for proper approvals as prescribed by the client’s internal control. One of the purchase orders in the chosen sample of 20 cannot be found, and the auditor is unable to use alternative procedures to test whether that purchase order was properly approved. The auditor should

A. Choose another purchase order to replace the missing purchase order in the sample.

B. Consider this test of controls invalid and proceed with substantive procedures because internal control is ineffective.

C. Treat the missing purchase order as a deviation for the purpose of evaluating the sample.

D. Select a completely new set of 20 purchase orders.

Answer 1

(Q) An auditor plans to examine a sample of 20 purchase orders for proper approvals as prescribed by the client’s internal control. One of the purchase orders in the chosen sample of 20 cannot be found, and the auditor is unable to use alternative procedures to test whether that purchase order was properly approved. The auditor should

(Ans) The correct answer is option (C) :- Treat the missing purchase order as a deviation for the purpose of evaluating the sample.

• In some cases auditors may not be able to apply appropriate alternative procedures so the auditor should consider it as a limitation. Therefore in these cases the auditor should treat the selected items (missing purchase order) as a deviation for the purpose of evaluating the sample.