HW- F.71 - accurate. 4. Tom does not state why he chose...

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Auditing Concepts Module F: #71 Mistakes Made by Tom and Others: 1. Tom did not define the population size, which means the sample size he chose may not be accurate. a. Tom needs to define the population first before selecting the sample size. 2. Tom did not state why he was choosing paychecks for the test of controls. a. In the information given in the text, the senior accountant and his reviewing partner did not state a specific area that needed to be tested in the beginning. 3. The senior accountant and reviewing partner did not do an accurate statistical sampling the year before, which means the results they came to are probably not
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Unformatted text preview: accurate. 4. Tom does not state why he chose April and August to sample for payroll checks. a. Tom may need to increase the control frequency compared to the population, if he knew what the population size was from the beginning. 5. With a sample size of 100, Tom found zero deviations. The upper limit rate of deviation at 5%, risk of overreliance of 3% and tolerable rate of deviation 5%. a. Tom needs to reduce reliance on internal controls and increase control risk. b. Also, Tom needs to expand the sample size to have the upper limit rate of deviation to be less than the tolerable rate of deviation....
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