Marty has to audit the sales transactions of Okawa Ltd., which supplies tools to the mining industry. Okawa Ltd. carries a large number of different makes and models of standard mining tools. It also designs and manufactures tools for special purposes and for miners operating in difficult conditions. The custom-designed tools are made only after a contract has been signed and a deposit received, while standard tools are supplied to regular customers on receipt of a telephone order. Okawa Ltd.'s sales transactions vary from a few dollars to millions of dollars depending on the number of items sold, whether the individual items are large or small tools, and whether the tools are standard items or custom designed.
Marty is instructed to gather evidence about the sales transactions using sampling and vouching. This is explained in detail in the audit program.
Required
(a) What would you expect to see in the audit program given to Marty about (1) the sample selection and (2) the vouching procedures? Explain.
(b) How could Marty use CAATs to help gather the evidence?