You are auditing the Pro-Card (Procurement Credit card) system for the City. One of the tasks you have been assigned to perform is to examine the reconciliation process in which every month a staff person in each area matched the charges to each card with the purchase to make sure that each purchase was authorized. There are 2,231 Pro-Cards currently being used across various departments that make up city government. Your audit test is - for a sample of Pro-Card accounts, take one month out of the past 12 months and verify that the month was reconciled indicating that all charges to the card for the respective account were for authorized purchases or that an charges in dispute were resolved.

(a) Describe a judgment (non-statistical) sampling approach you could take to performing this test.

(b) If you wanted to take a statistical approach, describe a sampling plan you could use to do statistical sampling.

(c) Why would you want to use a statistical approach rather than a judgmental approach?

(d) Assume that you want to be 90% confident that the clerks correctly completed the monthly reconciliation of the Pro Card account 95% of the time. From previous work, you have an expectation that this is not done correctly 2% of the time. What is the initial sample size you would plan for the audit test? (Tables are on follow pages.)

(e). Assume that you sample size you took was 200 and that you found 5 errors. Evaluate these results and indicate what, if any, further action is necessary?