Levelland, Inc., a client of your firm for several years, uses a voucher system for processing all cash disbursements, which number about 500 each month. After carefully reviewing the company’s internal control structure, your firm decided to sample the vouchers for nine specific characteristics to test the effectiveness of the voucher system operation. The characteristics to be evaluated are listed on the voucher test worksheet.

Required:
Assume the use of non statistical sampling on the nine tests. For each test, com¬ pare the sample deviation rate with the planned tolerable rate and explain why you would or would not accept the results of the test.

Transcribed Image Text:

Levelland, Inc. Voucher Test Worksheet-Years Ended December 31 Column A Column B Column C Column D Column E Estimated Planned Risk of Assumed Number of Deviation Tolerable Overreliance Sample Deviations Characteristics Rate (%) Rate (%) (%) Size Found Invoice in agreement with purchase order or check request 1.1 Invoice in agreement with receiving report .4 32 460 5 340 +2 4 Invoice mathematically accurate Extensions Footings 1.4 1.0 .3 332 5 1000 5 460 5 340 222 10 Account distributions correct Voucher correctly entered in voucher register Evidence of accounting department .5 S 2 5 340 1 checks- Comparison of invoice with purchase order or check request 2.0 5 240 2 Comparison of invoice with receiving report 1.3 5 160 2 Proving mathematical accuracy of invoice 1.5 3 5 340 10