You are responsible for developing training material for staff auditors on substantive sampling. After presenting it, staff auditors ask you several questions. Explain how you would answer them.
a. Is it always better to sample more items than fewer items?
b. When should I stratify a sample?
c. How do I decide whether to perform substantive tests or to use analytical procedures? Analytical procedures are much easier than substantive testing.
d. How do I convince the client that the likely misstatements are valid misstate ments? For the known misstatements, I can show the client the documents to explain the misstatements. I can't do this for likely misstatements, so it is harder to convince the client that the misstatements are valid.
e. Why do I put the misstatements I found on the proposed audit adjustment schedule if the tolerable misstatement is higher than the projected misstatement for the account I am auditing? Why can't I just ignore these misstatements?
f. Can I do all the substantive testing at year-end? How long will it take?