Edwards has decided to use probability-proportional-to-size (PPS) sampling, sometimes called dollar-unit sampling, in the audit of a
Question:
Edwards has decided to use probability-proportional-to-size (PPS) sampling, sometimes called dollar-unit sampling, in the audit of a client's accounts receivable balance. Few, if any, misstatements of the account balance are expected. Edwards plans to use the following PPS sampling table:
Required:
a. Identify the advantages of using PPS sampling over classical variables sampling.
b. Calculate the sampling interval and the sample size Edwards should use given the following information.
Requirements (c) through (f) are not related to (a) and (b).
c. Assuming a sampling interval of $5,000, calculate the total projected misstatement if the following three errors were discovered in a PPS sample:
Principles of Auditing and Other Assurance Services
ISBN: 978-0078025617
19th edition
Authors: Ray Whittington, Kurt Pany