You are auditing the revenue of XYZ Co. for the year ending 12/31/2020. Total sales for the
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Question:
Questions:
1. Based on the above scenario, how many sales transactions will be tested as part of this sample?
For each question #2-4, assume this is the only change made (all other inputs are based on the original scenario):
2. If the desired level of assurance is changed to moderate, how is the sample size affected?
3. If you do not target any transactions, how would this impact the sample population and how many will be tested?
4. Assume that your testing of internal controls resulted in several control deficiencies in the revenue cycle, and as such, your estimated misstatement is 100,000, how would this impact your sample size?
For each question #5-7, all inputs should be based on the original scenario:
5. Based on the original scenario, you perform testing and find $2,980 of misstatements in your total sample of $1,254,800. Using the ratio estimation method to project the error onto the entire population, what is your total sample misstatement and total projected misstatement? What conclusion will you make about this testing and what are the next steps?
6. How would the projected misstatement, total sample misstatement, and your conclusions differ from question #5 if you used the difference estimation method instead?
7. Assume that you find $8,600 of misstatements in your total sample of $1,254,800. Using the ratio estimation method, what is your total sample misstatement and total projected misstatement? What conclusion will you make about this testing and what are the next steps?
Related Book For
Auditing and Assurance services an integrated approach
ISBN: 978-0132575959
14th Edition
Authors: Alvin a. arens, Randal j. elder, Mark s. Beasley
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