An audit partner is developing an office training program to familiarize her professional staff with statistical decision models applicable to the audit of dollar-value balances. She wants to demonstrate the relationship of sample sizes to population size and variability and the auditor’s specifications as to tolerable misstatement and ARIA. The partner prepared the table on the next page to show comparative population characteristics and audit specifications of the two populations.

In items (1) through (5) below, indicate for the specific case from the table that follows the required sample size to be selected from Population 1 relative to the sample from Population 2.

1. In case 1 the required sample size from Population 1 is_________           

2. In case 2 the required sample size from Population 1 is_________           

3. In case 3 the required sample size from Population 1 is_________           

4. In case 4 the required sample size from Population 1 is_________           

5. In case 5 the required sample size from Population 1 is_________.

Your answer should be selected from the following responses:

a. Larger than the required sample size from Population 2.

b. Equal to the required sample size from Population 2.

c. Smaller than the required sample size from Population 2.

d. Indeterminate relative to the required sample size from Population 2.

Audit Specifications as to a Sample Characteristics of Population 1 from Population 1 Relative to a Relative to Population 2 Sample from Population 2 Estimated Tolerable Size Population Misstatement ARIA Case 1 Equal Equal Equal Lower Case 2 Equal Larger Larger Equal Case 3 Larger Equal Smaller Higher Equal Equal Case 4 Smaller Smaller Higher Case 5 Larger Equal Lower