Questions from Auditing and Assurance

Q: During the first few months of the year, John Smith,

During the first few months of the year, John Smith, the cashier in a small company, was engaged in lapping operations. However, he was able to restore the amount of cash “borrowed” by March 31, and h...

Q: CPAs may decide to apply nonstatistical or statistical techniques to audit testing

CPAs may decide to apply nonstatistical or statistical techniques to audit testing. a. List and explain the advantages of applying statistical sampling techniques to audit testing. b. List and discuss...

Q: In performing a test of controls for sales order approvals, the

In performing a test of controls for sales order approvals, the CPAs stipulate a tolerable deviation rate of 8 percent with a risk of assessing control risk too low of 5 percent. They anticipate a dev...

Q: An auditor has reason to suspect that fraud has occurred through forgery

An auditor has reason to suspect that fraud has occurred through forgery of the treasurer’s signature on company checks. The population under consideration consists of 3,000 checks. Can discovery samp...

Q: What information do CPAs request from a financial institution on the standard

What information do CPAs request from a financial institution on the standard confirmation form?

Q: An auditor used a nonstatistical sampling plan to audit the inventory of

An auditor used a nonstatistical sampling plan to audit the inventory of an auto supply company. The auditor tested the recorded cost of a sample of inventory items by reference to vendors’ invoices....

Q: Cathy Williams is auditing the financial statements of Westerman Industries. In

Cathy Williams is auditing the financial statements of Westerman Industries. In the performance of mean-per-unit estimation of credit sales, Williams took a sample of 200 of the 10,000 items in the po...

Q: Ratio estimation and difference estimation are two widely used variables sampling plans

Ratio estimation and difference estimation are two widely used variables sampling plans. Required: a. Under what conditions are ratio estimation or difference estimation appropriate sampling plans fo...

Q: Bill Jones wishes to use nonstatistical sampling to select a sample of

Bill Jones wishes to use nonstatistical sampling to select a sample of his client’s 3,000 accounts receivable, which total $330,000. He believes that $30,000 represents a reasonable tolerable misstate...

Q: During an audit of Rottel Company, an auditor needs to estimate

During an audit of Rottel Company, an auditor needs to estimate the total value of the 5,000 invoices processed during June. She estimates the standard deviation of the population to be $30. Determine...