Assume that you are working on the audit of a small company and are examining purchase invoices for the presence of a “received” stamp. The omission of the stamp is thus a deviation. The population is composed of approximately 4,000 invoices processed by the company during the current year.
You decide that a rate of deviation in the population as high as 5 percent would not require any extended audit procedures. However, if the population rate of deviation is more than 5 percent, you would want to assess a higher control risk and conduct more extensive substantive tests.
In each case, write the letter of the sample (A or B) that, in your judgment, provides the best evidence that the rate of deviation in the population is 5 percent or lower ( using a risk of overreliance of 5 percent). Assume that each sample is selected at random. Refer to AICPA sample evaluation tables ifnecessary.

  • CreatedOctober 27, 2014
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