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The following Exhibit DC 10 4 gives auditor judgment and audit sampling

The following Exhibit DC 10-4 gives auditor judgment and audit sampling results for six populations. Assume large population sizes.

Required:

a. For each population, did the auditor select a smaller sample size than is indicated by using the tables for determining sample size (assume K 5 0 in sample size planning)?

Explain the effect of selecting either a larger or a smaller size than those determined in the tables.

b. Calculate the sample deviation rate and the achieved P or upper error limit for each population.

c. For which of the six populations should the sample results be considered unacceptable? What options are available to the auditor?

d. Why is analysis of the deviations necessary even when the populations are considered acceptable?

e. For the following terms, identify which is an audit decision, a non-statistical estimate made by the auditor, a sample result, and a statistical conclusion about the population:

1. Estimated population deviation rate

2. Tolerable deviation rate

3. Acceptable risk of overreliance on internal control

4. Actual sample size

5. Actual number of deviations in the sample

6. Sample deviation rate

7. Achieved P or upper errorlimit

Required:

a. For each population, did the auditor select a smaller sample size than is indicated by using the tables for determining sample size (assume K 5 0 in sample size planning)?

Explain the effect of selecting either a larger or a smaller size than those determined in the tables.

b. Calculate the sample deviation rate and the achieved P or upper error limit for each population.

c. For which of the six populations should the sample results be considered unacceptable? What options are available to the auditor?

d. Why is analysis of the deviations necessary even when the populations are considered acceptable?

e. For the following terms, identify which is an audit decision, a non-statistical estimate made by the auditor, a sample result, and a statistical conclusion about the population:

1. Estimated population deviation rate

2. Tolerable deviation rate

3. Acceptable risk of overreliance on internal control

4. Actual sample size

5. Actual number of deviations in the sample

6. Sample deviation rate

7. Achieved P or upper errorlimit

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