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a. sampling risk is 10%. Determine the sample size for each of the following controls

a. sampling risk is 10%. Determine the sample size for each of the following controls
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Solution Guide / Answer Key:

ACCOUNTING

AUDITING
Auditing: A Business Risk Approach, 7th Edition Rittenberg, Johnstone and Gramling
Chapter 8

8-36

Required:
a. sampling risk is 10%. Determine the sample size for each of the following controls:

Control Tolerable Rate % Expected Rate % Sample Size Number of Failures Achieved Upper Limit
1 5 0 0
2 5 1 3
3 10 0 1
4 5 0.5 1
5 10 3 2

b. explain why the sample sizes for controls 2 and 3 are different from those for control 1.
c. What is the general effect on sample size of using a 10% sampling risk versus a sampling risk versus a sampling risk of 5%? Explain.
d. under what conditions would it be better to use the largest sample size for all the conditions as opposed to using the individual sample sizes in part (a)?
e. assume a sample size of 80 is used for all five controls. Determine the achieved upper limit of failures in the population for each control and complete the table in part (a).
f. based on the answers to part (e), on which of the controls can the auditor place the planned degree of reliance? Why?

 

FILE: MS WORD

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