For the audit of Carbald Supply Company, Carole Wever, CPA, is conducting a test of sales for nine months of the year ended 12/31/X7. Included among her audit procedures are the following:

Foot and crossfoot the sales journal and trace the balance to the general ledger.
Review all sales transactions for reasonableness.
Select a sample of recorded sales from the sales journal, and trace the customer names and amounts to duplicate sales invoices and the related shipping document.
Select a sample of shipping document numbers and perform the following tests:
(i) Trace the shipping document to the related duplicate sales invoice.
(ii) Examine the duplicate sales invoice to determine whether copies of the shipping document, shipping order, and customer order are attached.
(iii) Examine the shipping order for an authorized credit approval.
(iv) Examine the duplicate sales invoice for an indication of internal verification of quantity, price, extensions, footings, and trace the balance to the subsidiary ledger.
(v) Compare the price on the duplicate sales invoice with the approved price list and the quantity with the shipping document.
(vi) Trace the balance on the duplicate sales invoice to the sales journal and subsidiary ledger for customer name, amount, and date.

Required:

a. For which of these procedures could attributes sampling be conveniently used?

b. Considering the audit procedures Wever has developed, what is the most appropriate sampling unit for conducting most of the attributes sampling tests ?

c. Set up an attributes sampling data sheet similar to the one in Figure 3-5. For all compliance tests, assume an acceptable upper precision limit of 3.5 percent and an expected population error rate of 1 percent. For all substantive tests, use 2.5 percent for the upper precision limit and a zero expected population error rate. Use a 90 percent confidence level for all tests.

d. For the audit procedures not included in the attributes sampling test in part

c, describe appropriate judgmental sampling procedures to determine the items to include in the sample.

Figure 3-5:

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Client: Holly Mfg. Co. Audit Area: Test of Transactions-Purchases Date: 12-31-8x Define the Objective: Examine vouchers and related decuments to determine if the system is functioning as intended and as described in the audit programm Define the Population Precisely: Vouchers for the period 1-1-8x to 12-31-8x. First voucher number = =3689; last voucher number=9452. Define the Sampling Unit, Organization of Population Items, and Random Selection Procedures: Voucher sumber, recorded in the voucher register sequentially: 1 random number table_