HW 8.9 Auditing Assurance

HW 8.9 Auditing Assurance - Diana Vincent Auditing class HW...

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Diana Vincent Auditing class HW Chapter 8 PROBLEM 8-32 page 308 OUTLINE: Firm: Baker, CPA Hired: to audit Mill Co.'s financial stmt's Period: Year ended Sept 30 Baker decides to obtain evidence about the effectiveness of the design and the operation of functions. During the prior yr's audits, Baker had used nonstatistical sampling, but for the current year Non-statistical sampling = auditor does not use statistical Baker used a statistical sample in the tests of controls to eliminate the need for judgment. techniques to determine the sample size, select the sample and/or measure sampling risk when evaluating results Baker wanted to assess control risk at a low level, so a tolerable deviation rate of 20% was established. Statistical sampling= uses the laws of probability to compute an attribute sampling technique that would use an expected population deviation rate of 3% for the sample size and evaluate the sample results, thereby 8,000 shipping documents and to defer consideration of the allowable risk of assessing control risk too low permitting the auditor to use the most efficient sample size and until the sample results were evaluated. to quantify the sampling risk for the purpose of reaching a statistical conclusion about the population. Baker used the tolerable deviation rate, the population size of 80 would be sufficient. When it was subsequently determined that the actual population was about 10,000 shipping documents, Baker The major advantages of statistical sampling are that it helps increased the sample size to 100. the auditor 1. design an efficient sample; 2. measure the sufficiency of evidence obtained; and 3. Quantify sampling risk
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This note was uploaded on 11/11/2011 for the course ACCT 320 taught by Professor Rogermcdonald during the Spring '11 term at Davenport.

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