You have been assigned to the audit of Maliano Ltd for the year ended 30th June 2020. You have conducted audit procedures to test the following controls related to Malianos inventory purchases process. 1. Goods received are counted, inspected and compared to purchase order before acceptance. 2. Receiving reports are pre-numbered and the sequence accounted for.

As a result of your testing, you obtained 4 deviations for control 1, and 6 deviations for control 2.

Required:

a. Determine the initial sample size to test control 1. Show all workings marks will be awarded for your workings/logic/approach, not just your result.

b. Explain with both calculations and words whether control 1 is reliable or not reliable?

c. Determine the initial sample size to test control 2. Show all workings marks will be awarded for your workings/logic/approach, not just your result.

d. Explain with both calculations and words whether control 2 is reliable or not reliable?

e. In your own words explain the concept of tolerable error in sampling this must be written in your own words.

Control Required Confidence Level % 95 99 Tolerable Deviation Rate % 5 2 Expected Number of Errors 2 2 1 2 Control Required Confidence Level % 95 99 Tolerable Deviation Rate % 5 2 Expected Number of Errors 2 2 1 2