The use of statistical sampling techniques in an audit of financial statements does not eliminate judgmental decisions.

Required:

a. Identify and explain four areas in which judgment may be exercised by CPAs in planning a statistical test of controls.

b. Assume that the auditors' sample shows an unacceptable deviation rate. Discuss the various actions that they may take based upon this finding.

c. A non stratified sample of 80 accounts payable vouchers is to be selected from a population of 3,200. The vouchers are numbered consecutively from 1 to 3200, and are listed. 40 to a page, in the voucher register. Describe four different techniques for selecting a random sample of vouchers for inspection.

Answer rating: 100% (QA)

a Following are the four areas in which CPA may exercise his judgment in planning a statistical judgment To define the populations characteristics whi... View the full answer