Edwards has decided to use probability proportional to size (PPS) sampling in the audit of a client's accounts receivable balance. Few, if any, account balance overstatements are expected. Edwards plans to use the following PPS sampling table:

Required:

a. Identify the advantages of using PPS sampling over classical statistical sampling.
(Note: Requirements

(b) and

(c) are not related.)

b. Calculate the sampling interval and the sample size Edwards should use given the following information:

c. Calculate the total projected misstatement if the following three misstatements were discovered in a PPS sample:

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Reliability Factors for Overstatement Risk of incorrect acceptance Number of overstatements 1% 5% 10% 15% 20% 8129 0 4.61 3.00 2.31 1.90 1.61 6.64 4.75 3.89 3.38 3.00 8.41 6.30 5.33 4.72 4.28 3 10.05 7.76 6.69 6.02 5.52