A best practice in auditing is to very clearly document the description of your audit scope (i.e.,
Question:
A "best practice" in auditing is to very clearly document the description of your audit scope (i.e., the criteria used to develop your sample). The scope should be described thoroughly enough that an auditor with a reasonable amount of experience could follow the scope description in the original work paper to come up with the same or a very similar sample.
Assume that you have been assigned to create a stratified sample which will be used to test the Accounts Receivable balance. Your task is to determine a dollar cutoff level, above which all customer balances will be selected for confirmation. The cutoff level should result in testing approximately 34% of the balance. If total A/R Balance is 1500000, Sample A/R Balance is 500000
a. What dollar amount results in testing approximately 34% of the Accounts Receivable balance?
b. Clearly document the scope for testing Accounts Receivable. List the names and account balances of the customers whose account balances will be tested.
Expert Answer:
a To determine the dollar amount that results in testing approximately 34 of the Accounts Receivable ... View the full answer
