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Calculate the sample size and the sampling interval using Table 8-5, Edwards should use for the following information: (Use the tables, not IDEA, to solve for these problems. Round your interval answer to the nearest dollar amount.)           Tolerable misstatement $ 15,000   Expected misstatement $ 6,000   Desired confidence level   95 % Recorded amount of accounts receivable $ 300,000

Calculate the sample size and the sampling interval using Table 8-5, Edwards should use for the following information: (Use the tables, not IDEA, to solve for these problems. Round your interval answer to the nearest dollar amount.)           Tolerable misstatement $ 15,000   Expected misstatement $ 6,000   Desired confidence level   95 % Recorded amount of accounts receivable $ 300,000

MATLAB: An Introduction with Applications
MATLAB: An Introduction with Applications
6th Edition
ISBN:9781119256830
Author:Amos Gilat
Publisher:Amos Gilat
Chapter1: Starting With Matlab
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b. Calculate the sample size and the sampling interval using Table 8-5, Edwards should use for the following information: (Use the tables, not IDEA, to solve for these problems. Round your interval answer to the nearest dollar amount.)


 

       
Tolerable misstatement $ 15,000  
Expected misstatement $ 6,000  
Desired confidence level   95 %
Recorded amount of accounts receivable $ 300,000  
 

 

**Statistical Sample Sizes for Attribute Sampling — 95-Percent Desired Confidence Level (i.e., 5-Percent Risk of Incorrect Acceptance)** **Table 8-5** This table provides statistical sample sizes necessary for attribute sampling under various conditions, specifically with a 95% desired confidence level (equating to a 5% risk of incorrect acceptance). It is used in auditing and quality control environments to determine the number of samples that need to be tested to make reliable inferences about a population. **Headers:** - **Expected Population Deviation Rate**: The anticipated rate of deviation within the population. - **Tolerable Deviation Rate**: The rate of deviation that the auditor is willing to accept. **Columns:** - **Expected Population Deviation Rate**: Ranges from 0.00% to 7.00%. - **Tolerable Deviation Rate**: Varies from 2% to 20%. Each cell within the table contains two values: - First value: Indicates the required sample size. - Value in parentheses: Indicates the maximum number of deviations allowable in the sample for the auditor to conclude that the tolerable deviation rate is not exceeded. **Important Notes:** - An asterisk (*) indicates that the sample size required is too large to be cost-effective for most audit purposes. - The number in parentheses is crucial as it represents the maximum tolerable deviations in the sample size. For example: - For an **Expected Population Deviation Rate** of 0.00% and a **Tolerable Deviation Rate** of 2%, the required sample size is 149, and 0 deviations are acceptable. - Conversely, for the same deviation rate expectation and a tolerable deviation rate of 20%, the required sample size significantly decreases to 14 with 0 deviations acceptable. **Practical Application:** Auditors can use this table to determine the number of items to sample when assessing control procedures. If an auditor expects a 1% population deviation and can tolerate a 5% deviation rate, they would need a sample size of 93, accepting up to 1 deviation (see the intersection between the 1.00% row and the 5% column). **Conclusion:** This table is a critical resource for ensuring that audits are both effective and efficient, helping auditors to balance between the necessary level of assurance and practical constraints like time and cost.
Transcribed Image Text:**Statistical Sample Sizes for Attribute Sampling — 95-Percent Desired Confidence Level (i.e., 5-Percent Risk of Incorrect Acceptance)** **Table 8-5** This table provides statistical sample sizes necessary for attribute sampling under various conditions, specifically with a 95% desired confidence level (equating to a 5% risk of incorrect acceptance). It is used in auditing and quality control environments to determine the number of samples that need to be tested to make reliable inferences about a population. **Headers:** - **Expected Population Deviation Rate**: The anticipated rate of deviation within the population. - **Tolerable Deviation Rate**: The rate of deviation that the auditor is willing to accept. **Columns:** - **Expected Population Deviation Rate**: Ranges from 0.00% to 7.00%. - **Tolerable Deviation Rate**: Varies from 2% to 20%. Each cell within the table contains two values: - First value: Indicates the required sample size. - Value in parentheses: Indicates the maximum number of deviations allowable in the sample for the auditor to conclude that the tolerable deviation rate is not exceeded. **Important Notes:** - An asterisk (*) indicates that the sample size required is too large to be cost-effective for most audit purposes. - The number in parentheses is crucial as it represents the maximum tolerable deviations in the sample size. For example: - For an **Expected Population Deviation Rate** of 0.00% and a **Tolerable Deviation Rate** of 2%, the required sample size is 149, and 0 deviations are acceptable. - Conversely, for the same deviation rate expectation and a tolerable deviation rate of 20%, the required sample size significantly decreases to 14 with 0 deviations acceptable. **Practical Application:** Auditors can use this table to determine the number of items to sample when assessing control procedures. If an auditor expects a 1% population deviation and can tolerate a 5% deviation rate, they would need a sample size of 93, accepting up to 1 deviation (see the intersection between the 1.00% row and the 5% column). **Conclusion:** This table is a critical resource for ensuring that audits are both effective and efficient, helping auditors to balance between the necessary level of assurance and practical constraints like time and cost.
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