You are planning the confirmation of accounts receivable. There are 2,000 customer accounts with a total book
Question:
You are planning the confirmation of accounts receivable. There are 2,000 customer accounts with a total book value of $5,643,200. Tolerable misstatement is set at $175,000, expected misstatement is $40,000, and DR is 30%.
Required
a. What is the sampling interval?
b. What is the maximum sample size?
c. What is the largest value you can use for a random start?
d. Using the following list of the first 15 items in your population, a random start of $25,000, and a rounded sample interval of $100,000, identify the items to be included in your sample.
e. What is the probability of selecting each of the following population items, assuming a $100,000 sampling interval?
Item Book Value Probability of Selection
1........................3,900
2.......................26,000
4.....................130,000
6.....................360,000
f. Why might the final sample size be less than the maximum sample size?
Step by Step Answer:
Auditing A Business Risk Approach
ISBN: 978-0538476232
8th edition
Authors: Karla Johnstone, Audrey Gramling, Larry Rittenberg