ABC Company requires the amount and part number on the sales order and shipping document to be compared to the sales invoice before the invoice is mailed. An accounting clerk in billing performs the control and initials the company’s copy of the invoice, indicating that the comparison has been made. The accounting clerk also verifies that the price on the sales order is equal to the price on the sales invoice. In the current year, 3,175 invoices have been processed. The invoice numbers are 200,326 to 203,500. The sales order, shipping document, and sales invoice are stapled together and filed by sales invoice number in several file drawers.

a. You decide to test this control. Explain why you believe this control could be tested. What is the possible result from testing the control?

b. What is the assertion related to the internal control?

c. Prepare a sampling plan to test the control that has been performed many times daily. Additional evidence will be obtained regarding sales transactions from substantive tests.

d. How will you select your sample? Do you have several choices in the method used to select the sample? Explain your answer.

e. The accounting firm has determined that the number of tolerable deviations for this internal control test is two deviations. Explain how you will evaluate the results of your sample. State clearly the possible conclusions from your tests.

f. Explain how you would modify this internal control test's audit procedures for a dual-purpose test. If a dual-purpose test is performed, what evidence will you obtain from it? Explain your answer.

g. How will you control sampling risk and nonsampling risk in the test?

h. Will you perform a statistical test or a nonstatistical test? Explain your answer.