Question 2: Sampling

Noela Francis walked out of the Old Rock Bakery (Old Rock) operation and headed to the nearby Tim Hortons for a French Vanilla coffee. She had chosen random selection to test for proper authorization of Old Rocks purchasing transactions. She had just completed the initial audit testing of the purchasing transactions and had evaluated the results. Her conclusion was that the deviation rate of 12 exceptions in a sample of 80 transactions was relatively high.

In addition ,Noela was preparing to start the audit of another client, Rohr Industries, an airplane component manufacturer. She had discussed sampling methodology with her audit team and it had been determined that the Rohr Industries systems did not lend themselves easily to statistical sampling techniques. The audit team would have to employ non-statistical sampling.

Required:

a) What is the procedure that Noela would follow when her initial testing showed a relatively high deviation rate for the Old Rock Bakery transactions? (3 marks)

b) What is non-statistical sampling? (2 marks)

c) Describe the non-statistical sampling methods that were open to Noela and her team for the Rohr Industries audit. (2 marks)

d) Which of Noelas two clients systems would lend themselves to stratification? (3 marks)