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2comprehensive Case Sampling

1. The document contains details of 3 audit sampling cases including sample size calculations, projected misstatement calculations, and conclusions based on sampling results. 2. Case 1 provides sample data from an inventory population and asks to calculate population estimates using different sampling methods. 3. Case 2 provides information on accounts receivable sampling including expected and actual misstatements, tolerable misstatement, and risk levels to calculate sample size, interval, projected misstatement, precision, and incremental allowance. 4. Case 3 provides sample data from a voucher population and asks to identify the 4th voucher selected and the auditor's conclusion given a detected overstatement from the sample.

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Lee Teuk
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428 views3 pages

2comprehensive Case Sampling

1. The document contains details of 3 audit sampling cases including sample size calculations, projected misstatement calculations, and conclusions based on sampling results. 2. Case 1 provides sample data from an inventory population and asks to calculate population estimates using different sampling methods. 3. Case 2 provides information on accounts receivable sampling including expected and actual misstatements, tolerable misstatement, and risk levels to calculate sample size, interval, projected misstatement, precision, and incremental allowance. 4. Case 3 provides sample data from a voucher population and asks to identify the 4th voucher selected and the auditor's conclusion given a detected overstatement from the sample.

Uploaded by

Lee Teuk
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd
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Name: ________________________ Section: ____________

COMPREHENSIVE CASES

CASE 1

An auditor has obtained the following data by selecting a random sample from an inventory population:
Number Audited Carrying
of Items Value Amount
Sample 200 P220,000 P200,000
Population 5,000 5,200,000
Required:

1. The estimate of the population peso value using mean-per-unit sampling is


2. The estimate of the population peso value using difference estimation sampling is
3. The estimate of the population peso value using ratio estimation is

CASE 2

RNB has decided to use PPS sampling in an audit of client’s accounts receivable balance. RNB has
evaluated the client’s internal control and anticipates that misstatements will be found in the account
balance.

RNB plans to use the following PPS sampling tables:

Expansion Factors for Expected Misstatement    

Risk of Incorrect Acceptance


1% 5% 10% 15% 20% 25% 30%
Factor 1.9 1.6 1.5 1.4 1.3 1.3 1.2
               
Source: AICPA, Auditing Procedure Study, "Audit Sampling", New York, 1996

Reliability Factors for Misstatements of Overstatement  


Number of
Overstatement Risk of Incorrect Acceptance
Misstatements 1% 5% 10% 15% 20% 25% 30%
0* 4.61 3.00 2.31 1.90 1.61 1.39 1.21
1 6.64 4.75 3.89 3.38 3.00 2.70 2.44
2 8.41 6.30 5.33 4.72 4.28 3.93 3.62
3 10.05 7.76 6.69 6.02 5.52 5.11 4.77
4 11.61 9.16 8.00 7.27 6.73 6.28 5.90
5 13.11 10.52 9.28 8.50 7.91 7.43 7.01
6 14.57 11.85 10.54 9.71 9.08 8.56 8.12
7 16.00 13.15 11.78 10.90 10.24 9.69 9.21
8 17.41 14.44 13.00 12.08 11.38 10.81 10.31
9 18.79 15.71 14.21 13.25 12.52 11.92 11.39
10 20.15 16.97 15.41 14.42 13.66 13.02 12.47
Source: AICPA, Auditing Procedure Study, "Audit Sampling", New York, 1996

RNB also determined the following information:

Tolerable misstatement P 40,000


Expected misstatement 10,000
Recorded amount of accounts receivable 600,000
Risk of incorrect acceptance 5%

Recorded Audit
Amount Amount
1st misstatement P1,500 P1,200
2nd misstatement 9,000 8,750
3rd misstatement 200 0
4th misstatement 4,000 3,800

Required:

1. Compute for the sample size.


2. Compute for the sample interval.
3. Compute for the projected misstatement.
4. Compute for the basic precision.
5. Compute for the incremental allowance.

CASE 3

An auditor has been assigned to take a peso-unit sample of a population of vouchers in the purchasing
department. The population has a total carrying amount of P300,000. The auditor believes that a
maximum misstatement of P900 is acceptable and would like to have 95% confidence in the results. (The
reliability factor at 95% and zero misstatements = 3.00.)

Additional information is provided as follows:

Table of First 10 Vouchers in Population

Voucher # Balance Cumulative Balance


1 100 100
2 150 250
3 40 290
4 200 490
5 10 500
6 290 790
7 50 840
8 190 1,030
9 20 1,050
10 180 1,230
Required:

1. Given a random start of P 50 as the first peso amount, what is the number of the fourth voucher to
be selected, assuming that the sample size will be 1,000?
2. In examining the sample, one overstatement was detected causing an extension of P 270 to the
tolerable misstatement. Assuming that the sample size was 1,000 and that the maximum peso
amount of overstatement if no misstatements were found was established to be P 900 before the
sampling analysis, what conclusion should the auditor now draws from the sampling information?

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