Question: Two auditors follow different approaches in determining sample size for unstratified difference estimation. The first auditor always selects a sample size of 75 items. He

Two auditors follow different approaches in determining sample size for unstratified difference estimation. The first auditor always selects a sample size of 75 items. He then calculates the confidence limits and compares them to materiality. If the population is rejected, he carefully goes through the options you identified in 5-19 and selects the best option considering the circumstances. The second auditor determines the proper preliminary estimate of the sample size by the use of a formula. If the population is rejected, he goes through a process identical to that of the first auditor. Are both methods correct ? Which method is preferable ? Explain your answers.

Question 5-19:

What options does the auditor have when the decision rule rejects the population as not acceptable? State the circumstances for which each option is preferable.

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