Psy 315 Week 3 Case Study
Chapter 8
8-8
One would use MUS sampling most appropriately when they test for potential overstatement of an account balance. Also they would use it when few or no misstatements are expected.
8-10
a. The auditor should consider the inconsistency of the risk of incorrect acceptance, expected misstatement, population, tolerable misstatement, and population size.
b. The auditor will select the sample in a way he or she believes is demonstrative of the population (haphazard or random based).
c. The sample results should be expected to the population and compared to tolerable misstatement. There also should be some consideration of whether there is an acceptable allowance of sampling error.
8-19
Generalized audit software (GAS) is a computer …show more content…
For control 2, it is larger because the expected rate is larger than control 1. This will require the sample to be more precise. For control 3, it is smaller because the tolerable rate is larger. The sample does not have to be …show more content…
Dependency on reaching certain earnings goal for bonuses or stock options may be one. Pressure on executives meeting analysts’ earnings expectations may be one. Also, the company may need additional financing. There is a possibly that bankruptcy might be pending (operating losses, technology change, or decline in industry). Lastly, a merger may be undecided and the management will want to discuss the largest price possible.
10-14
Each and every customer receives a statement and can validate the statement by correctness and time. The customer can follow up on errors in their accounts (failure to post payment or returned items). Creating a segregation of duties is to separate a group to handle the customer reviews. The individuals that handle those costumer reviews do not take care of the cash or have the proper authorization to the accounts receivables. The group will piece as a double check on the correctness of the accounts receivables processing.
10-23
The population that symbolizes the sales transactions that occurred should be where the sample comes from (shipping documents). With the sample from the population tracing the transactions into sales records is the right way to go. The auditor will be able to determine whether or not the transactions are being recorded.
8-8
One would use MUS sampling most appropriately when they test for potential overstatement of an account balance. Also they would use it when few or no misstatements are expected.
8-10
a. The auditor should consider the inconsistency of the risk of incorrect acceptance, expected misstatement, population, tolerable misstatement, and population size.
b. The auditor will select the sample in a way he or she believes is demonstrative of the population (haphazard or random based).
c. The sample results should be expected to the population and compared to tolerable misstatement. There also should be some consideration of whether there is an acceptable allowance of sampling error.
8-19
Generalized audit software (GAS) is a computer …show more content…
For control 2, it is larger because the expected rate is larger than control 1. This will require the sample to be more precise. For control 3, it is smaller because the tolerable rate is larger. The sample does not have to be …show more content…
Dependency on reaching certain earnings goal for bonuses or stock options may be one. Pressure on executives meeting analysts’ earnings expectations may be one. Also, the company may need additional financing. There is a possibly that bankruptcy might be pending (operating losses, technology change, or decline in industry). Lastly, a merger may be undecided and the management will want to discuss the largest price possible.
10-14
Each and every customer receives a statement and can validate the statement by correctness and time. The customer can follow up on errors in their accounts (failure to post payment or returned items). Creating a segregation of duties is to separate a group to handle the customer reviews. The individuals that handle those costumer reviews do not take care of the cash or have the proper authorization to the accounts receivables. The group will piece as a double check on the correctness of the accounts receivables processing.
10-23
The population that symbolizes the sales transactions that occurred should be where the sample comes from (shipping documents). With the sample from the population tracing the transactions into sales records is the right way to go. The auditor will be able to determine whether or not the transactions are being recorded.