Question: Data relative to three MPU sampling plans are presented below. Tolerable misstatement 1 2 3 $110,000 $140,000 $170,000 Size of population 5,000 6,000 8,000

1 2 3 $110,000 $140,000 $170,000 Size of population 5,000 6,000 8,000

Data relative to three MPU sampling plans are presented below. Tolerable misstatement 1 2 3 $110,000 $140,000 $170,000 Size of population 5,000 6,000 8,000 Risk of incorrect rejection 10% 5% 10% Estimated population standard deviation $ 80 $ 105 $ 125 Risks that misstatements accumulating to greater than tolerable misstatements will not be detected by: Internal control 50% 40% 40% Analytical and other substantive procedures (excluding this test of 25% 50% 85% details) Desired overall audit risk 5% 5% 5% Inherent risk 100% 100% 100% R Factors b. Analysis: Determine an appropriate risk of incorrect acceptance for each population. Plan 1 Plan 2 Plan 3 Determine sample size: Calculate the sample size in each of the plans. Planned Allowance Sample Size Plan 1 Plan 2 Plan 3

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