1.Assume you are auditing ABC Communities, a publicly-traded real estate company. You are assigned to develop an audit plan for the real estate assets - "Building and improvements, net" account balance of about $18.8 million as of 12/31. You obtained the following details for this account for the current year.

Building and improvements

Beginning of year balance

17,151,277

Additions during current year

+5,362,980

Disposals during current year

(3,285,101)

Depreciation this year

(439,881)

Ending of year balance

18,789,275

(amount per the balance sheet)

Develop an audit plan for testing the "Building and improvements" account balance as of 12/31. To do so, identify two management assertions that need to be tested. Then, for each management assertion, develop and explain specific audit procedures you would perform to test the assertions.

1.Determine the sample size for each of the control procedures shown in the following table (assuming a very large population):

Control Procedure

Parameters

1

2

3

4

Risk of incorrect acceptance

5%

5%

10%

10%

Tolerable deviation rate

4%

5%

7%

8%

Expected population deviation rate

1%

2%

3%

4%

Sample size

Control Procedure

Results

1

2

3

4

Number of deviations

0

5

4

3

Sample deviation rate

Computed upper deviation rate

Auditor's conclusion

Using the sample sizes determined above and the number of deviations shown here, determine the sample deviation rate, the computed upper deviation rate, and the auditor's conclusion for each control procedure.