ACCOUNTING
8-36 (Attribute Sample Size Determination and Implementation)
Required
a. Sampling risk is 10%. Determine the sample size for each of the following controls:
Tolerable Expected Sample Number of Achieved
Control Rate % Rate % Size Failures 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 of control 1.
c. What is the general effect on sample size of using a 10% sampling riskversus a sampling risk of 5%? Explain.
d. Under what conditions would it be better to use the largest sample size for all the controls as opposed to using the individual sample size 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 placed and planned degree of reliance? Why?
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