Case 3 (20 points): Audit Sampling Case This Case Study is an Audit Sampling case. Note that 4 points out of the 20 total available points for the case assignment will be based on your participation in the class case study discussion on April 3'\". You may work in pairs for this case study no more than 2 students! If you choose to work with a partner, make sure both of your names are included on all documents. ONLY ONE PERSON SHOULD UPLOAD THE SUBMISSION FOR YOUR GROUP. If you work with another person on this assignment, the points you receive for the written part of the case study (up to 16) will be the same for both individuals. However, the participation portion of your grade will remain an individual score. 50 it is possible to receive a different overall score from your partner if your level of class participation differs. Bac round Information Your audit rm, Hawk & Soar, PLLC, has been engaged to perform the annual audit of TealDeal, Inc. The Company manufactures and sells board shorts, tshirts, and visors with customized designs and/or logos. TealDeal, Inc. is required to submit audited nancial statements as part of the terms of its loan with the bank. Hawk & Soar has audited TealDeal for the past four years. During the current year audit, your team has already performed the majority of the audit work; you are being asked to help tie up some loose ends in order to nish the audit and issue the audit report. Audit Sampling Another member of your audit team (Jamie) has started the audit work for revenue using a reliance approach. Unfortunately, Jamie neglected to properly document the preliminary work used to determine the sample size. Your job is to complete the necessary documentation, in addition to testing the nal control for which the client recently provided the requested documentation. Jamie, along with the audit team manager, determined the following three controls should be tested as part of the audit of revenue: 1. Sales are properly authorized for credit approval. 2. Sales are reviewed by the sales manager to ensure they are properly priced. 3. Credit memos for sales returns are properly authorized once all goods have been returned. Hawk & Soar's sampling guidance for testing controls is based on attribute sampling. In testing the operating effectiveness of controls you must determine the likely deviation rate (the rate at which a control is not properly operating). Testing controls to measure the deviation rate provides evidence about whether the control is operating effectively an acceptablv high percentage of the time and helos