Question $1(3$ points$)$

You have recently been hired as an audit trainee with a public accounting firm. Lancaster Manufacturing is a new client for the firm, and you have been assigned to select the sample for a test of sales shipments over the year. The operations and the industry environment of Lancaster are very similar to another client that you are very familiar with.

All shipments to customers are entered in the shipping log by the shipping clerk. There were approximately $5,000$ shipments over the past year. Three major clients account for $10\%$ of the shipments that make up $75\%$ of the value of sales for the year.

You are aware of that there are two possible approaches$-$ statistical sampling, and judgmental sampling.

Required:

Which sample approach will you adopt for this assignment? Why?

Your audit objective is to test sales$-$ completeness and accuracy. What will be your population from which you will draw your sample?Question $2(1$ point$)$

You are the auditor for Rambutan Software, a large game development company with over $2,000$ employees. For each of the past three years, you have assessed the control risk of the sales system as moderate to low, adopting a combined audit approach.

This year, due to Covid$-19$ pandemic restrictions, all staff have transitioned from $"$in office" to "work from home" $($WFH$).$ All WFH staff now access company information systems using encrypted VPN connections.

REQUIRED:

Assuming that all other internal control systems have not changed, will the WFH arrangements change your assessment of the risks of material misstatement for the sales system? Explain.

What audit approach will you adopt for the sales system$-$ combined or substantive? Why?