In auditing receivables, Schmidt, CPA will use statistical sampling to evaluate whether there was proper authorization...

   

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In auditing receivables, Schmidt, CPA will use statistical sampling to evaluate whether there was proper authorization for shipping the goods and to determine whether the resulting receivables are fairly stated. Schmidt has determined the following. Accounts receivable balance = $500,000 Number of customer balances included = 212 A JR X PDR= Parameters for test of controls Risk of assessing control risk too low = 5% Tolerable deviation rate = 6% Expected deviation rate = 2% Allowance for sampling risk 3% Sample size = 75 customer invoices Audit procedure: invoice for proper authorization (credit check, available goods, etc.) Parameters for substantive tests Acceptable level of risk = 5% Assessed level of inherent and control risk: Low Tolerable misstatement = $2,000 Sample size = 50 (outstanding) customer invoices Audit procedure: Send confirmations for each invoice In auditing receivables, Schmidt, CPA will use statistical sampling to evaluate whether there was proper authorization for shipping the goods and to determine whether the resulting receivables are fairly stated. Schmidt has determined the following. Accounts receivable balance = $500,000 Number of customer balances included = 212 A JR X PDR= Parameters for test of controls Risk of assessing control risk too low = 5% Tolerable deviation rate = 6% Expected deviation rate = 2% Allowance for sampling risk 3% Sample size = 75 customer invoices Audit procedure: invoice for proper authorization (credit check, available goods, etc.) Parameters for substantive tests Acceptable level of risk = 5% Assessed level of inherent and control risk: Low Tolerable misstatement = $2,000 Sample size = 50 (outstanding) customer invoices Audit procedure: Send confirmations for each invoice

Answer rating: 100% (QA)

Lets go through each question and determine the answers 1 How will the sample size for the attribute sampling plan change if the risk of assessing control risk too low is revised to 1 Answer i Increas... View the full answer