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You are a staff auditor who has been assigned the task of testing controls related to salary expense. You are making a statistical sample of

You are a staff auditor who has been assigned the task of testing controls related to salary expense. You are making a statistical sample of payments to be tested. Some relevant information is provided to you by your senior and is as follows:

-- Tolerable deviation/exception rate: 15%

-- Acceptable Risk of Overreliance: 5%

-- Estimated population deviation/exception rate: 0.5%

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Determine the minimum sample size based on the above parameters (2 marks)

Your senior auditor reviewed your sample size calculation, but also decided to use her judgment in determining the sample size and chose to conduct the tests on 50 payments. You therefore selected the 50 payments and performed the tests. You found three payments recorded which did not have supporting documents. Does the control pass or fail? Justify (4 marks)

If the population consists of 10,000 payments, and the control has to apply to every payment, how many times does the control not work in the population? (2 marks)

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