3.1 Distinguish between statistical and non-statistical sampling. (3) 3.2 Discuss the factors you would consider in deciding on the size of the sample you will select. (7) 3.3 Indicate whether the population from which you will select your sample, will be all wage earners on the payroll (master file) or only wage earners who actually worked during the wage period selected as the base wage period, that is to say excluding employees who were absent from work. Justify your answer. (3) 3.4 Suggest two appropriate stratifications which you may consider carrying out on this population. Justify each. (4) 3.5 To comply with your senior's request, describe the audit procedures you will carry out on the employees selected for testing in respect of: 3.5.1 whether they are fictitious and (4) 3.5.2 normal and overtime hours worked. (4)

You are a member of the audit team of MakeaBrake Ltd, a company that manufactures braking systems for trucks and cars. The company has a staff of 400 hourly-paid employees who are spread over the ten cast centres which make up the entire process of manufacture. The number, grade and category of employees vary from cost centre to cost centre; some. centres, such as quality control, have as few as ten employees, the majority of whom are skilled, while other centres may have as many as 70 employees, the vast majority of whom are unskilled. Each cost centre is controlled by a foreman. Hours worked are recorded using clock cards and a conventional timing device. The foremen authorise all overtime for their cost centres. Engagements, dismissals and grade wage rates (which vary considerably from grade to grade) are handled by human resources in conjunction with the foremen and union officials, where necessary Wage eamers are only paid for hours clocked, that is to say, if an employee is ill for a period, he is not paid. (An independent 'sick leave' system is in operation.) No wage payouts are conducted, wages are paid directly into employees' bank accounts by electronic funds transfer. The company's computerised payroll contains the following information: 1. Employee number, name and surname 2. Cost centre we Grade and category (skilled/unskilled) 4. Normal and overtime hours worked | wi Gross earnings a PAYE deduction 7. UIF deduction 29 Metalworkers Union deductions (compulsory) Net eamings 10. Bank account number 11. SARS tax reference number 12. Identity number. Your firm's audit plan for the audit of wages is to select a base wage period which is comprehensively audited and then to perform analytical procedures for selected other wage periods comparing those periods to the base period. The base period for the current year's audit has been selected and you have been requested by your senior to select a sample from the base wage period payroll for audit. The sample will be used to 1. asgist.in determining whether any fictitious workers appear on the payroll; apd 2. determine whether the figures on the payroll for the wage period selected are valid and accurate. He further informs you that he does not require you to select a statistical sample; g.wellthought-+through non-statistical sample will be sufficient. You have general audit software which is compatible with the client's system available to you. (Source: Adapted from Graded Questions on Auditing 2024)