Rob Oostendorp
Auditing
Hendrix
3/20/04
Chapter 9
#’s 32, 42
32.
a. Because the auditors are testing controls, the auditor would want to use
Attributes Sampling because it enables the auditor to estimate occurrence of
certain characteristics in the population.
b. Sample size per look-up table: 77.
c. Yes. Because the Expected Population Deviation Rate is 2%, and we assume 4
deviations, the sample size would be 181 and the tolerable deviation rate is 4%.
(4% < 8%)
42. A)
1. Allowance for sampling risk – this is a judgment estimate created by the CPAs to
create a range, set by + or – limits from the sample results within which the true
value of the population characteristic being measured is likely to lie.
2. Tolerable misstatement is an estimated monetary that may exist in an account
that, when combined with the misstatement in other accounts, will not cause the
financial statements to be materially misstated.
3. Sampling risk is another estimation created to conclude that a sample might be
different from the conclusions they would reach if hey examined every item in the
entire population.
4. The evaluation of the sample results is another judgment because the auditors
consider not only the actual # of deviations observed, but also the nature of the
deviations.
42. B)
If the auditors find unacceptable deviation rate, they should first investigate the cause of
the unexpected high deviation rate. Next, they must evaluate the effect of the deviation on
he financial statements and adopt auditing procedures that are specifically designed to
detect the type of deviation observed.
42. C)
Four ways of selecting vouchers to test are:
1. Random Testing:
a. Random number tables.
b. Random number generators.
c. Systematic selection which involves starting at a random point and
selecting and testing every n’th item.
2. Haphazard Selection:
a. Arbitrarily selecting data.
3. Block selection
a. Selecting Blocks of information or vouchers to test.
4. Stratification
a. Stratify the data, then test it with any of the methods above.