Nandini has just completed the accounts receivable confirmation process in the audit of Danforth Paper Company Ltd.,

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Nandini has just completed the accounts receivable confirmation process in the audit of Danforth Paper Company Ltd., a paper supplier to retail shops and commercial users.
Following are the data related to this process:
Accounts receivable recorded balance..............................$2,760 000
Number of accounts..........................................................7 320
A nonstatistical sample was taken as follows:
All accounts over $10 000 (23 accounts)..............................$465 000
77 accounts under $10 000)....................................................$81 500
Materiality)............................................................................$100 000
Inherent and control risk are both high. No relevant analytical procedures were performed. The table below gives the results of the confirmation procedures.
Nandini has just completed the accounts receivable confirmation process in

REQUIRED
a. What type of nonstatistical sampling method would Nandini have used? Justify your response.
b. Explain the advantages and disadvantages of using stratified sampling for the Danforth Paper Company Ltd. sample selection.
c. If statistical sampling were used, which method would be used? Justify your response.
d. Describe the process that would be used to evaluate the results of the nonstatistical sample. Consider both the direct implications of the misstatements found and the effect of using a sample.

Accounts Receivable
Accounts receivables are debts owed to your company, usually from sales on credit. Accounts receivable is business asset, the sum of the money owed to you by customers who haven’t paid.The standard procedure in business-to-business sales is that...
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Related Book For  book-img-for-question

Auditing The Art and Science of Assurance Engagements

ISBN: 978-0133405507

13th Canadian edition

Authors: Alvin A. Arens, Randal J. Elder, Mark S. Beasley, Joanne C. Jones

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