Listed below are five situations for which you plan to use statistical sampling:

1. You will observe an annual physical verification of a perpetual inventory. A statistical sample of the inventory will be counted under the observation of the internal auditors.

2. You suspect that prices were deliberately raised on some of the perpetual inventory line items to cover inventory shrinkage caused by thefts.

3. A large number of errors are occurring in the keypunch operation. You recommend the installation of a continuous statistical sample.

4. Your audit program calls for examination of purchase orders to see if they were issued within the prescribed time limits. You plan to use minimum audit effort for this test.

Your audit objective will be satisfied with a 95 percent probability that not more than 2 percent of the purchase orders were issued late.

5. You find that material issue documents for the period under audit are stored in a records warehouse in serial number order in boxes containing 1,000 documents each. There are 900 boxes of documents.

Required:
For each of the situations described above:

a. Identify the sampling plan or selection technique that would be most appropriate.

b. State why the particular plan or technique should be used.