TI P1 A population of vouchers is numbered 1 to 800. The auditor has decided to draw an unrestricted random sample of 50 vouchers using a random number table. 1. Write down the first four random numbers (in order) that the auditor should select from the random number table in the text (page 24). Begin your selection at row 6, column 4, starting position 1, and additional numbers are selected by moving down the table and reading from left to right. Let each random number indicate the voucher number that should be examined. If the random number does not identify a voucher in the population, label that random number "discard;" if the random number does identify a voucher, label it "select." 2. Contrary to the facts above, assume that systematic sampling is to be used to select the 50 items. What is the width of the sampling interval? Explain/show calculations. Give the range of the random number/voucher from which the first item in the sample should be selected 3. Contrary to the facts above, assume that random systematic sampling is used. What is the width of the sampling interval? Explain/show calculations. Assuming that the first random number that is selected is 30 and the second random number that is selected is 14, give the second voucher that should be included in the sample. P2 An auditor desires to test credit approvals on 12,000 sales invoices processed during 20x2. The auditor wishes to design a sample that will give 95 percent confidence that not more than 6 percent of the sales invoices were not approved. Based on prior audit experience, the auditor estimates that about 2 percent of the sales invoices are in error (not approved). Suppose that 2 deviations are later found in the sample. 1. Does this sampling application involve attribute or variables sampling. Explain. 2. Identify the particular sampling model (fixed sample size, sequential, or discovery) that would be most appropriate. Explain. 3. What sample size should the auditor examine? Document your answer. 4. What is the achieved upper precision limit? Document your answer. 5. What conclusion can the auditor draw from the sample? hu 3 21 AalbCeDdEe ADA AaCeDdEe AaBb v y Normal No Spacing Heading 1 Heading 2 Title P3 You desire to evaluate the reasonableness of the $1,250,000 book value of the inventory of your client, Worthington, Inc. You satisfied yourself earlier as to inventory quantities. During the examination of the pricing and extension of the inventory, the following data were gathered using unrestricted random sampling without replacement procedures: Planning data: Total items in the inventory, N Tolerable misstatement Estimated population standard deviation Risk of incorrect rejection Control risk Other procedures risk Audit risk 12,700 $120,000 $71.60 .05 20 .50 .05 Compute (1) acceptable precision and (2) sample size, n. Execution data: Assuming that adjusted precision is 588,000 and the estimated audit value from the sample is $1,165,000,(3) does the sample evidence support acceptance of the book value? Explain. English (United States O Focus patibility Mode Saved to my Mac References Mailings Review View Tell me Aav po v AaBbCcDdEe AaCeDdEe Av AaBBCCD AaBbCcDdE AaBb V Normal No Spacing Heading 1 FUE TO W WY Heading 2 Title Tolerable misstatement Estimated population standard deviation Risk of incorrect rejection Control risk Other procedures risk Audit risk $120,000 $71.60 .05 .20 .50 .05 Compute (1) acceptable precision and (2) sample size, n. Execution data: Assuming that adjusted precision is $88,000 and the estimated audit value from the sample is $1,165, 000, (3) does the sample evidence support acceptance of the book value? Explain. P4 Sanford Company operated 1,250 snack machines in San Francisco. Each machine has a transmitter that communicated sales and inventory levels to the homer office when the machine needs to be refilled. The transmitted information is usually accurate but may vary from actual amounts when the machine is not serviced properly. The company is experimenting with a new management company. The company has selected a sample of 60 machines to count for comparison with the recorded amounts of inventory based on the management company. The book value of the the total inventory is $300,000. Totals from the sample are summarized below: Amount per books $15.000 Amount per count $14,200 Difference (S800) 1. Using unstratified mean-per-unit sampling, calculate the estimated value of the inventory 2. Using difference estimation, calculate the estimated value of the inventory. 3. Using ratio estimation, calculate the estimated value of the inventory. ish (United States) Focus TI P1 A population of vouchers is numbered 1 to 800. The auditor has decided to draw an unrestricted random sample of 50 vouchers using a random number table. 1. Write down the first four random numbers (in order) that the auditor should select from the random number table in the text (page 24). Begin your selection at row 6, column 4, starting position 1, and additional numbers are selected by moving down the table and reading from left to right. Let each random number indicate the voucher number that should be examined. If the random number does not identify a voucher in the population, label that random number "discard;" if the random number does identify a voucher, label it "select." 2. Contrary to the facts above, assume that systematic sampling is to be used to select the 50 items. What is the width of the sampling interval? Explain/show calculations. Give the range of the random number/voucher from which the first item in the sample should be selected 3. Contrary to the facts above, assume that random systematic sampling is used. What is the width of the sampling interval? Explain/show calculations. Assuming that the first random number that is selected is 30 and the second random number that is selected is 14, give the second voucher that should be included in the sample. P2 An auditor desires to test credit approvals on 12,000 sales invoices processed during 20x2. The auditor wishes to design a sample that will give 95 percent confidence that not more than 6 percent of the sales invoices were not approved. Based on prior audit experience, the auditor estimates that about 2 percent of the sales invoices are in error (not approved). Suppose that 2 deviations are later found in the sample. 1. Does this sampling application involve attribute or variables sampling. Explain. 2. Identify the particular sampling model (fixed sample size, sequential, or discovery) that would be most appropriate. Explain. 3. What sample size should the auditor examine? Document your answer. 4. What is the achieved upper precision limit? Document your answer. 5. What conclusion can the auditor draw from the sample? hu 3 21 AalbCeDdEe ADA AaCeDdEe AaBb v y Normal No Spacing Heading 1 Heading 2 Title P3 You desire to evaluate the reasonableness of the $1,250,000 book value of the inventory of your client, Worthington, Inc. You satisfied yourself earlier as to inventory quantities. During the examination of the pricing and extension of the inventory, the following data were gathered using unrestricted random sampling without replacement procedures: Planning data: Total items in the inventory, N Tolerable misstatement Estimated population standard deviation Risk of incorrect rejection Control risk Other procedures risk Audit risk 12,700 $120,000 $71.60 .05 20 .50 .05 Compute (1) acceptable precision and (2) sample size, n. Execution data: Assuming that adjusted precision is 588,000 and the estimated audit value from the sample is $1,165,000,(3) does the sample evidence support acceptance of the book value? Explain. English (United States O Focus patibility Mode Saved to my Mac References Mailings Review View Tell me Aav po v AaBbCcDdEe AaCeDdEe Av AaBBCCD AaBbCcDdE AaBb V Normal No Spacing Heading 1 FUE TO W WY Heading 2 Title Tolerable misstatement Estimated population standard deviation Risk of incorrect rejection Control risk Other procedures risk Audit risk $120,000 $71.60 .05 .20 .50 .05 Compute (1) acceptable precision and (2) sample size, n. Execution data: Assuming that adjusted precision is $88,000 and the estimated audit value from the sample is $1,165, 000, (3) does the sample evidence support acceptance of the book value? Explain. P4 Sanford Company operated 1,250 snack machines in San Francisco. Each machine has a transmitter that communicated sales and inventory levels to the homer office when the machine needs to be refilled. The transmitted information is usually accurate but may vary from actual amounts when the machine is not serviced properly. The company is experimenting with a new management company. The company has selected a sample of 60 machines to count for comparison with the recorded amounts of inventory based on the management company. The book value of the the total inventory is $300,000. Totals from the sample are summarized below: Amount per books $15.000 Amount per count $14,200 Difference (S800) 1. Using unstratified mean-per-unit sampling, calculate the estimated value of the inventory 2. Using difference estimation, calculate the estimated value of the inventory. 3. Using ratio estimation, calculate the estimated value of the inventory. ish (United States) Focus