Problem 1

Sam Ple, auditor, has decided to rely on an audit client's debtors. Sam Ple plans to use sampling to obtain substantive evidence concerning the reasonableness of the client's debtors/accounts receivable balances. Required: Identify and analyze the steps that Sam Ple should include in the outline of the sampling plan providing examples and illustrations?

Problem 2

During the planning phase of an audit client, Ana Alitick (auditor) utilises analytical procedures. These procedures range from simple comparisons to the use of complex models involving many relationships and elements of data. The procedures also include comparisons of recorded amounts, or ratios developed from recorded amounts, to expectations developed by the auditors.

Required:

1) What are the purposes of analytical procedures?

2) What are the situations in the audit when analytical procedures can be used?

3) What types of comparisons are useful when performing preliminary analytical procedures?

4) Name the four categories of financial ratios and give an example of a ratio in each category. What is the primary information provided by each financial ratio category?

5) Describe the factors that influence an auditor's consideration of the reliability of data for purposes of achieving audit objectives?