Bill Jones wishes to use nonstatistical sampling to select a sample of his client’s 3,000 accounts receivable, which total $330,000. He believes that $30,000 represents a reasonable tolerable misstatement. He also has assessed both the combination of inherent and control risk at the maximum level and the risk that other substantive procedures will fail to detect a material misstatement at the maximum. He wishes to use a structured approach. Use the formula presented in the text to calculate the required sample size.
Answer to relevant QuestionsDuring an audit of Potter Company, an auditor needs to estimate the total value of the 5,000 invoices processed during June. The auditor estimates the standard deviation of the population to be $30. Determine the size sample ...The international CPA firm of Arthur Andersen faced significant liability in conjunction with its audits of Enron Corporation.Requireda. From a legal liability perspective, describe the unique features of this audit case.b. ...Rachel Robertson wishes to use mean-per-unit sampling to evaluate the reasonableness of the book value of the accounts receivable of Smith, Inc. Smith has 10,000 accounts receivable accounts with a total book value of ...Define, and differentiate between, nonstatistical (judgmental) sampling and statistical sampling.What conditions are necessary for the auditors to use either the ratio or difference estimation techniques?
Post your question