Attributes Sampling with IDEA: Evaluating Sample Results. Based on a population sizeof 388 shipments, a 10 percent desired risk of overreliance, an expected population deviation rate of 1 percent, and a tolerable rate of deviation of 6 percent, the audit team selected asample of 58 items.In performing tests of controls, your audit team identified three shipments that were notsupported by an approved sales order and concluded that these represent deviations from thecontrol activity.Required:a. Use IDEA to determine the ULRD. What would the audit team’s conclusion be withrespect to the functioning of ELM’s control over the authorization of sales transactions?Part (b) is a set of independent scenarios that affect the evaluation of sample results.b. For each of the following numbers of deviations, use IDEA to determine the ULRD andprovide the audit team’s conclusion with respect to the functioning of ELM’s controlover the authorization of sales transactions.1. 0 deviations.2. 1 deviations.3. 2 deviations.c. How do the results in part (b) reflect the relationship between the number of deviationsand the ULRD?
Attributes Sampling with IDEA: Evaluating Sample Results. Based on a population size
of 388 shipments, a 10 percent desired risk of overreliance, an expected population deviation rate of 1 percent, and a tolerable rate of deviation of 6 percent, the audit team selected a
sample of 58 items.
In performing tests of controls, your audit team identified three shipments that were not
supported by an approved sales order and concluded that these represent deviations from the
control activity.
Required:
a. Use IDEA to determine the ULRD. What would the audit team’s conclusion be with
respect to the functioning of ELM’s control over the authorization of sales transactions?
Part (b) is a set of independent scenarios that affect the evaluation of sample results.
b. For each of the following numbers of deviations, use IDEA to determine the ULRD and
provide the audit team’s conclusion with respect to the functioning of ELM’s control
over the authorization of sales transactions.
1. 0 deviations.
2. 1 deviations.
3. 2 deviations.
c. How do the results in part (b) reflect the relationship between the number of deviations
and the ULRD?
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