To test the pricing and mathematical accuracy of sales invoices, the auditors selected a sample of 200 sales invoices from a total of 41,600 invoices that were issued during the year under audit. The 200 invoices represented total recorded sales of $22,800. Total sales for the year amounted to $5 million. The test disclosed that of the 200 invoices audited, five were not properly priced or contained errors in extensions and footings. The five incorrect invoices represented $720 of the total recorded sales, and the errors found resulted in a net understatement of these invoices by $300.
Explain what conclusions the auditors may draw from the above information, assuming the sample was selected:
a. Using nonstatistical sampling.
b. As part of a difference estimation plan for estimating the total population value.
c. As part of an attributes sampling plan using a stipulated tolerable deviation rate of 5 percent and a risk of assessing control risk too low of 5 percent.

  • CreatedOctober 25, 2014
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