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Audit Sampling

25 de marzo de 2015
Paulino Angulo Cadena. MSc

Nombres:

I. Audit Sampling in Tests of Controls [Chapter 11]


A. Define audit sampling.

B. Which word properly completes each of the following statements?


1. Decreasing the risk of assessing control risk too low
from 10% to 5% will cause the sample size to:

___ Increase

___ Decrease

2. Decreasing the tolerable deviation rate from 5% to 4%


will cause the sample size to:

___ Increase

___ Decrease

3. Decreasing the expected population deviation rate


from 1% to 0.5% will cause the sample size to:

___ Increase

___ Decrease

C. The following list of possible deviations from prescribed controls has been recorded in
the internal auditors working papers:
Invoice
Number
1472
1545

1719

Prescribed Control
Credit department authorization
of credit.
Shipping department verification
of agreement of goods shipped
with sales order.
Credit department authorization
of credit.

Finding
Evidence of credit department approval of invoice.
Amount of invoice exceeds maximum credit limit.
No evidence of shipping department verification
but invoice agrees with sales order.
Name of authorizer not included on approved
signature list. Auditor investigation disclosed a
new hire in credit whose name was inadvertently
omitted from the authorized list of signers.

Indicate for each invoice number whether it represents a deviation from the prescribed
control. Briefly explain the reason for each answer.
D. The following information concerning one of the prescribed controls has been
accumulated:
Estimated number of transactions per year
Risk of assessing control risk to low
Tolerable deviation rate
Expected population deviation rate
Sample size per table
Sample size used
Number of deviations found
Sample deviation rate
Upper deviation limit
Allowance for sampling risk

5000
5%
4%
0.5%
117
125
2
1.6%
4.9%
3.3%

Evaluate the sample results. Your answer should include:


1. A statistical conclusion.
2. The audit decision you would make based on the quantitative sample results. Be sure
to include the reason for this decision.
Internal Auditing: Assurance and Advisory Services, 3rd Edition. 2013 by The Institute of Internal Auditors
Research Foundation, 247 Maitland Avenue, Altamonte Springs, FL 32701 USA
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Nombres:

Audit Sampling
25 de marzo de 2015
Paulino Angulo Cadena. MSc

II. Tests of Controls and Attribute Sampling [Chapter 11]


Calgari Clothing is a division of A&B Industries and manufactures high-quality silk ties that are
marketed under a number of brand names. As an internal auditor for A&B, you have been
assigned to review Calgaris controls over purchasing and have determined that there are a
number of controls in place. You have decided to test the operating effectiveness of the
following control: Vendor invoices are agreed to receiving reports and purchase orders for
product, quantity, and price. You also have decided to apply attribute sampling in your tests.
Applicable sampling tables are presented on the following pages.
A. Clearly state how you would test the operating effectiveness of the control identified above.
B. Assume that you expect a 2% deviation rate in the sample and that you will tolerate a
deviation rate of 7% at a 5% risk of assessing control risk too low. What is the appropriate
sample size for your audit test?
C. Assume that the correct sample size is 100. Assume further that you properly tested the 100
sample items and found three items for which there was no purchase order. Evaluate your
sample results and indicate what, if any, further action you should take.

Internal Auditing: Assurance and Advisory Services, 3rd Edition. 2013 by The Institute of Internal Auditors
Research Foundation, 247 Maitland Avenue, Altamonte Springs, FL 32701 USA
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