The following questions concern the determination of the proper sample size in attributes sampling:

a. For each of the columns numbered 1 through 7, determine the initial sample size needed to satisfy the auditor’s requirements from the appropriate table in Figures 3-2 and 3-3. Wherever the sample size is more than 10 percent of the population, adjust it with the finite correction factor.

b. Using your understanding of the relationship between the factors above and sample size, state the effect on the initial sample (increase or decrease) of changing each of the following factors while the other three are held constant:
(i) An increase in the confidence level (ii) An increase in the desired upper precision limit (iii) An increase in the estimated population error rate (iv) An increase in the population size

c. Compare your answers in part b with the results you determined in part a. Which of the four factors appears to have the greatest effect on the initial sample size ? Which one appears to have the least effect ?

d. Why is the sample size referred to as the initial sample size?

Transcribed Image Text:

2 3 4 5 6 7 Confidence level 90% 95% 95% 95% 95% 95% 95% Desired upper precision limit Estimated population 6% 6% 4% 6% 8% 6% 5% error rate Population size 3% 3% 3% 1,000 100,000 6,000 1,000 3% 3% 3% 0% 500 500 1,000,000