CA's firm is joint auditor of the TC Bank and is responsible this year for the audit of securities. As in prior years, audit procedures have been carried out during the year on security transactions and balances recorded in the books. CA is planning the physical security count on October 31, the bank's fiscal year end. In prior years, this count had been carried out over a three-day period by a task force of auditors from both audit firms. The count continued 24 hours a day with teams of counters working 8-hour shifts until all the securities had been counted. During this period, the auditors took over control of the vaults so that the routine bank operations in the vault were effectively suspended (this suspension could range from one to three business days, depending on whether the count commenced Friday evening).

CA had discussed the forthcoming physical count with bank officials and some reservations had been expressed. First, the anticipated two-day disruption of the securities department in the current year was very inconvenient to the bank. Second, the audit fee was increasing each year and the officials questioned the justification of the cost of the count in sheer hours alone. And third, since the bank's computer department had complete records of all security transactions and certificates held on data files, it was suggested that a more modern approach to the count might be adopted. Fur¬

ther, CA knew that the count was inconvenient to his firm's staff planning as a large portion of the staff were needed to do this job during a busy time of the year.

After the meeting with bank officials, CA wondered whether the count might be done on a statistical sampling basis similar to sampling techniques used by his firm in verifying receivables. He sat down to draft a memorandum on this approach for consideration by his partners.

Required Outline the points to be included in CA's memorandum under the following headings:

a. Audit objectives of the physical count.

b. Description and assessment of various statistical sampling techniques in terms of achieving the audit objectives.

c. Recommendations, taking into account any other considerations.

Note: For the purpose of your answer, ignore any statutory requirements of external bank auditors.