Question: An auditor used a nonstatisitcal sampling plan to audit the inventory of a bicycle supply company. The auditor tested the recorded cost of a sample

An auditor used a nonstatisitcal sampling plan to audit the inventory of a bicycle supply company. The auditor tested the recorded cost of a sample of inventory items by reference to vendors invoices. In performing the test, the auditor verified all the items on two pages selected at random from the clients 400 page inventory listing. The sampling plan resulted in a test of $50,000 of the total book value of $5,000,000, and the auditor found a total of $5,000 in overstatements in the sample. Since the audit senior indicated that a material misstatement in the inventory account was $100,000, the auditor concluded that the recorded inventory value was materially correct.

Evaluate the auditors sampling plan and the manner in which the results were evaluated.
What must the auditor do with the potential material misstatement?
Is sampling risk present? What is sampling risk?
How would the sampling plan be different if a statistical sample had been used?

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