Lenter Supply Company is a medium-sized distributor of wholesale hardware supplies in the central Ohio area. It has been a client of yours for several years and has instituted excellent internal controls for sales at your recommendation.

In the audit of sales, one of the major concerns is the effectiveness of the controls in ensuring that all shipments are billed. You have decided to use audit sampling in testing internal controls.

Requirements

a.	State an effective audit procedure for testing whether shipments have been billed. What is the sampling unit for the audit procedure?
b.	Assume that you expect no exceptions in the sample but are willing to accept a TER of 4 percent. At a 5 percent ARO, what is the appropriate sample size for the audit test? You may complete this requirement using attributes sampling.
c.	Design a random selection plan for selecting the sample from the population, using systematic sampling. Use the sample size determined in part b. Use a random starting point of 11932.
d.	Your supervisor suggests the possibility of performing other sales tests with the same sample as a means of efficiently using your audit time. List two other audit procedures that can conveniently be performed using the same sample, and state the purpose of each of the procedures.
e.	Is it desirable to test the occurrence of sales with the random sample you have designed in part c? Why or why not?

Requirement a. State an effective audit procedure for testing whether shipments have been billed. What is the sampling unit for the audit procedure? attached. The sampling unit will therefore To test whether shipments have been billed, a sample of warehouse removal slips should be selected and examined to see if they have the proper sales invoice be the warehouse removal slip. Requirement b. Assume that you expect no exceptions in the sample but are willing to accept a TER of 4 percent. At a 5 percent ARO, what is the appropriate sample size for the audit test? You may complete this requirement using attributes sampling. The appropriate sample size for the audit test is 74 Requirement c. Design a random selection plan for selecting the sample from the population, using systematic sampling. Use the sample size determined in part b. Use a random starting point of 11932. (Round to the nearest whole number.) Using systematic sampling, the sample will be selected by beginning with 11932 and then selecting at intervals of Thus, 11932 will be the first selection, will be selected next, followed by , and so on