You have been asked to do planning for statistical testing in the control testing of the audit of cash receipts. Following is a partial audit program for the audit of cash receipts:
1. Review the cash receipts journal for large and unusual transactions.
2. Trace entries from the prelisting of cash receipts to the cash receipts journal to determine whether each is recorded.
3. Compare customer name, date, and amount on the prelisting with the cash receipts journal.
4. Examine the related remittance advice for entries selected from the prelisting to determine whether cash discounts were approved.
5. Trace entries from the prelisting to the deposit slip to determine whether each has been deposited.
REQUIRED
a. Identify which audit procedures can be tested using attributes sampling. Justify your response.
b. State the appropriate sampling unit for each of the tests in part (a).
c. Define the attributes that you would test for each of the tests in part (a). State the audit objective associated with each of the attributes.
d. Define exception conditions for each of the attributes that you described in part (c).
e. Which of the exceptions would be indicative of potential fraud? Justify your response.