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Client: Pinnacle Manufacturing Audit Area: Tests of Controls and Substantive Test of Transactions--Acquisitions ingin reports purchase order, and Define otherthe related Objective(s): documents to determine whether the system has functioned as intended and as described in the audit program Define the population precisely (including stratification, if any): vouchers from 1/1/2011 to 10/31/2011. first voucher 6734 last voucher 33722 Define the sampling unit, organization of population items, and random selection procedures: 1. 2. 3. 4. 5. 6. evidence of internal verification of voucher package including property of purchase dates unit Description Attributes costs, prices,of extensions, footing, account clasification recording in journal, and posting and summarization prices in vendors invoices confirm to approved price limits established by management price times quanitity and other calculation on the vendors invocies are correct Planned Audit Actual Results EPER TER ARACR Initial sample Size 0 low 10% 30 0 low 10% 40 1% low 10% 50 evidence of proper account clasification on venors invoice 1% low 10% 50 dates on entries in purchae journal agree with dates on receiving reports 1% low 10% 50 0 low 10% 30 evidence of internal verification of each purchase voucer Results: vouvher number,recorded sequentially in the acquistions journal,random number function in electronic spreadheet Sample Size Number of Exceptions SER Calculated Sampling Error (TER-SER) Client: Pinnacle Manufacturing Audit Area: Tests of Controls and Substantive Test of Transactions--Cash Disbursements d checks and other related document Definesin theorder Objective(s): to determine whether the system has functioned as intended and as described in the audit program Define the population precisely (including stratification, if any): cancelled checks from the dates 1/1/2011-10/31/2011 first check 12376 last check37318 Define the sampling unit, organization of population items, and random selection procedures: Planned Audit 1. 2. 3. 4. Actual Results EPER TER ARACR Initial sample Size 0 low 10% 40 0 low 10% 40 date of signature, proper endoresement and cancellation of each check 0 low 10% 40 date on cancelled check matches the bank cancellation date 0 low 10% 40 cash discunts are correct 0 low 10% 40 Description of Attributes payee,name,amount,and date on cancelled check agrees with related purchase journal and cash disbursements entry checks contain signature,proper endorsement and cancellation of each check 5. 6. Results: check number,recorded sequentially in the cash disbursements journal, random number function in electronic worksheet Sample Size Number of Exceptions SER Calculated Sampling Error (TER-SER) 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 55 56 57 20282 17351 15891 14120 18441 9636 17284 22343 12055 14253 15113 20696 20756 19879 17311 12665 20091 20095 20609 15765 21683 19873 14761 17167 12683 12965 18586 15924 16649 22734 22863 13823 16976 15645 18628 12308 15967 12804 11542 18708 17742 17341 16295 15389 14111 10498 18740 11094 21278 16241 17544 19852 13006 22991 13911 16374 12847 9377 9540 9845 9992 10055 10328 10385 10626 11069 11180 11269 11272 11408 11473 11545 11709 11720 11731 11803 11918 11923 12107 12337 12370 12444 12457 12532 12563 12688 12705 12784 13070 13143 13193 13470 13516 13740 13990 14035 14334 14356 14445 15042 15068 15132 15303 15645 15945 16129 16137 16180 16266 16270 16303 16791 16821 16827 58 59 60 61 62 63 64 65 66 67 68 69 70 71 72 73 74 75 76 77 78 79 80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 100 9388 22983 20182 22807 22737 10896 16675 15274 20210 19668 21927 9905 21896 17526 18333 16128 10713 10614 20925 11896 20040 22704 10066 13172 17140 20603 16863 17022 11406 10129 20554 11479 10003 17628 11178 9632 19210 18538 15592 16311 15098 14410 16902 16878 16979 17164 17513 17620 17979 18018 18029 18442 18588 18784 18861 18998 19172 19192 19373 19520 19529 19543 19721 19771 19773 19866 19891 20161 20186 20508 20899 20972 21168 21210 21237 21772 21894 21992 22193 22202 22332 22369 22502 22655 22989 23101 Client: Pinnacle Manufacturing Audit Area: Tests of Controls and Substantive Test of Transactions--Acquisitions eports purchase order,and other related ocuments to determine whether the system has functioned as intended and as described in the Define the Objective(s): Define the population precisely (including stratification, if any): vouchers fro 1/1/2011-10/31/2011 firs Define the sampling unit, organization of population items, and random selection procedures 1. 2. 3. 4. 5. 6. evidence of internal verification of voucher package including property of purchase,dates unit Description of Attributes costs,prices,extensions,foo tings,account classification,recording in journal , and posting and summarization prices invendors invoices conform to approved price limits established by management price times quanitity and other calculation on the vendors invoices are correct evidence of proper account classification on vendors invoices dates on entries in purchase journal agree with dates on receiving reports evidence of internal verification of each purchase voucher Results: Planned Audit Actual Results EPER TER ARACR Initial sample Size 0 low 10% 30 30 0 low 10% 40 40 1% low 10% 50 50 1% low 10% 50 50 1% low 10% 50 50 0 low 10% 30 30 Sample Size s intended and as described in the audit program chers fro 1/1/2011-10/31/2011 first 6734 last 33722 election procedures: Actual Results Number of Exceptions Calculated Sampling Error (TER-SER) SER 2 3.30% 2.70% 0 0 5% 0 0 5% 0 0 5% 1 2% 3% 0 0 6% 17-28 (Ojectives 17-2) A sample size = (book value of population / tolerable misstatement) * assurance factor Assurance factor of 2 is used for a 10% ARIA. (6,900,000/150,000) * 2 = 92 B The auditor would have to increase the sampling size. Revise the assessed control risk as well as communicate with the audit C Systematic sample selection - select items from the sample based on the size of the interval. To determine this you would divi Example: Sales invoice ranging from 652-3151 With a desired sample size of 125 Your interval would be 20 [(3151-651)/125] D (1500/230,000) *6900, 000= 44,999.73 overstatement. Since if you round to 45 thousand it would fall below the auditor's tolerable misstatements of 150,000. The population would b mmunicate with the audit committee or management. rmine this you would divide the population size by the desired sample size. 0. The population would be fairly stated.