Question: Reply as to whether you believe the following statements are

Reply as to whether you believe the following statements are correct (C) or incorrect (I) concerning PPS sampling.
a. The size of a PPS sample is not based on the estimated variation of audited amounts.
b. PPS sampling results in a stratified sample.
c. Individually significant items are automatically identified.
d. PPS sampling results in a smaller sample size when numerous small misstatements are expected.
e. If few misstatements are expected, PPS sampling will usually result in a smaller sample size than classical variables sampling methods.
f. One does not need a book value for individual items to evaluate a PPS sample.
g. A PPS sample eliminates the need to project results to the overall population.
h. PPS sampling is “preferred” by professional standards.
Use the following information for parts i and j:
Tolerable misstatement ........ $ 50,000
Sample size ............... 100
Expected misstatement ......... $ 5,000
Recorded amount of accounts receivable . $300,000
i. The sampling interval is $500.
j. Increasing the expected misstatement to $10,000 will increase the sample size.


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  • CreatedOctober 25, 2014
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