Assignment ( NAO1)

Assignment

Chapter 14

AUDIT SAMPLING FOR TEST OF CONTROL AND SUBSTANTIVE TEST OF TRANSACTION

14-28

Questions :

The Following questions concern the determination of the proper sample size in audit sampling using the following table :

	1	2	3	4	5	6	7
ARACR (in percent )	10	5	5	5	10	10	5
TER	6	6	5	6	20	20	2
EPER (in percent)	2	2	2	2	8	2	0
Population size	1.000	100.000	6.000	1.000	500	500	1.000.000

Required :

a. Assume that the initial sample size for column 1 was determined to be 90 items , using non statistical sampling. For each of columns 2 through 7, use you judgment to decide  the appropriate non statistical  sample size. In deciding each sample size, consider the effect of  changes in each of the four factors (ARACR, TER, EPER, and population size ) compared with column 1.

b. For each of the column numbered 1 through 7, determine the initial sample size needed to satisfy the auditor’s requirements using attributes sampling from the appropriate  part of table 14-

c. Using you understanding of the relationship between the following factors and sample size, state the effect on the initial sample size (increase decrease ) of the changing each of the following factors while the other three are held constant :

-          An increase in ARACR

-          An increase in the TER

-          An increase in the EPER

-          An increase in the population size

d. Explain  why there is such a large difference in the sample size for columns 3 and 6

e. Compare your answer in part with the results you determined in part a ( non statistical sampling ) or part b ( attribute sampling ). Which of the four factor appears to have the greatest effect on the initial sample size ? which on appears to have the least effect

f. Why is the sample size called the initial sample size ? Click here to find the answer