Joe Jones walked out of the Old Rock Bakery operation and chewed on a Cheese Danish. He
Question:
Joe Jones walked out of the Old Rock Bakery operation and chewed on a Cheese Danish. He had chosen random selection to test for proper authorization of purchasing transactions. He had just completed the initial audit testing of the purchasing transactions and had evaluated the results. Joe concluded that the deviation rate of 12 exceptions in a sample of 80 transactions was relatively high.In addition, Joe was preparing to start the audit of another client, Rohr Industries, an airplane component manufacturer. He had discussed sampling methodology with his audit team, and it had been determined that the Rohr Industries systems did not lend themselves easily to statistical sampling techniques. The audit team would have to employ non-statistical sampling.Tasks:• What is the procedure that Joe Jones would follow when his initial testing showed a relatively high deviation rate for the Old Rock Bakery transactions?• What is non-statistical sampling?• Describe the non-statistical sampling methods that were open to Joe and his team for theRohr Industries audit.• Which of Joe’s two clients’ systems would lend themselves to stratification?
Auditing and Assurance Services
ISBN: 978-1260152166
7th edition
Authors: Timothy Louwers, Allen Blay, David Sinason, Jerry Strawser, Jay Thibodeau