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L11 Notes_Part_12

# L11 Notes_Part_12 - 5 Determine sample size(i.e TDR EPR...

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Statistical Attribute Sampling Plan I. Plan the Sample 1. State the objectives and define the population Are all sales valid? The 2010 Sales Journal for ABC Co. 2. Define attributes and exception conditions A. This should come from the audit program B. ex: Attribute: a shipping document exists C. ex: Deviation - no shipping document 3. Define the sampling unit each line in the sales journal

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Statistical Attribute Sampling Plan I. Plan the Sample Continued 4. Specify Materiality, Risk and Expectation TDR - the tolerable deviation rate is the maximum percentage of errors for which you would still rely on internal control ARO - the acceptable risk of assessing control risk too low indicates the risk you will accept of relying on IC when you should not. EDR - expected population deviation rate is your best estimate of the percentage of errors obtained from last year's W|P's or a preliminary sample
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Unformatted text preview: 5. Determine sample size (i.e., TDR, EPR, ARO, & Pop’n) 100/200 v. 50/100 100 + 100 v. 1000 + 100 100000 100000 Statistics Review Problem A local industrial company has two departments. In the larger department, about 45 sales invoices are completed each day; in the smaller department, about 15 invoices are completed each day. About 50 percent of all sales invoices completed in each department specify discounts from the company's list prices. However, the exact percentage varies from day to day. Sometimes it may be higher than 50 percent, sometimes lower. For a period of one year, and for each department, a member of the audit staff kept track of the number of days on which more than 60 percent of the sales invoices specified discounts. Which department do you think showed the greater number of such days? a.the larger department. b.the smaller department. c.about the same....
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L11 Notes_Part_12 - 5 Determine sample size(i.e TDR EPR...

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