3664880049 - CHAPTER12HOMEWORK 12-24 (a) When the client...

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CHAPTER 12 HOMEWORK 12-24 (a) When the client uses statistical sampling to estimate inventories, the auditors should perform the following procedures: (1) Review the validity of the client's statistical sampling plan. (2) Satisfy themselves as to the reasonableness of the sampling plan. (3) Be present when the sample is selected to ascertain that all items have an equal or determinable probability of selection. (4) Observe the client's counting procedure and make test counts. (5) Review the statistical evaluation and be satisfied as to the achieved allowance for sampling risk (precision) and sampling risk (confidence) level of the sample. (b) To verify physical quantities, the auditors should perform the following procedures (only 10 required): (1) Review the client's inventory taking plan and instructions. (2) Observe the physical count. (3) Make test counts on a selected basis. (4) Trace the test counts to the inventory summary. (5) Select items from the inventory summary and trace them to the original count records. (6) Trace items from the inventory summary to perpetual records. (7) Verify footings of the inventory summary. (8) Ascertain that there was a proper purchases and sales cutoff. (9)
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This note was uploaded on 11/19/2010 for the course ACCOUNTING Auditing taught by Professor G during the Spring '10 term at Oakton.

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3664880049 - CHAPTER12HOMEWORK 12-24 (a) When the client...

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