QUESTION 1MONETARY UNIT SAMPLINGWe are going to use MUS for testing additions to property plant and equipment to audit the assertions of existence and valuation. Few, if any,misstatements are expected.$15,000$6,00095%$300,000Tolerable MisstatementExpected MisstatementDesired Confidence LevelTotal amount of additions during the year1. What should our sample size be given the above information?(Hint: you will use the sample size tables from Ch. 8 to obtain sample sizefor MUS sampling):2. Calculate the UML assuming that you identified the following misstatements in your testing:Misstatement NumberBook ValueAudit Value1$400$320250033,0002,500The UML is (round to the nearest dollar): 8785

STEP 1 A formal data collection technique called monetary unit sampling (MUS) is used to check…

Answered: QUESTION 1 MONETARY UNIT SAMPLING We…

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

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Monetary Unit Sampling with IDEA: Determining Sample Size. Assume that your audit team has established the following parameters for the examination of ELM’s sales transactions: Risk of incorrect acceptance 10% Tolerable misstatement $311,711 (or 8% of the recorded balance of the transactions) Expected misstatement $77,928 (or 2% of the recorded balance of the transactions) Required:a. Use IDEA to determine the necessary sample size, given the above parameters.Parts (b), (c), and (d) are independent scenarios that affect the sample size in this example.b. Assume that your audit team has decided to increase their reliance on internal controland permit a corresponding increase in the risk of incorrect acceptance from 10 percentto 15 percent, which maintains overall audit risk at the same level. What is the necessarysample size, holding all other factors constant?c. Assume that your audit team has decided to reduce the level of tolerable misstatementfrom $311,711 to $233,783 (or…
d. Assume that based on additional controls implemented by ELM, your audit team has decided to reduce the expected misstatement from $77,928 to $19,482 (0.5 percent of the recorded balance of the transactions). What is the necessary sample size, holding all other factors constant?
Chapter 08 Problem 8-26 LO 8-6 Use the sample sizes and the number of deviations determined below. Control Procedure 2 3 5% 10 % 5% 7% 2% 3 % Parameters Risk of incorrect acceptance Tolerable deviation rate Expected population deviation rate Sample size (using tables) Sample size (using IDEA) Results Number of deviations Sample size Sample deviation rate 1 5 % 4% 1 % Computed upper deviation rate using Tables 1-Sided upper limit using IDEA Auditor's conclusion 156 156 181 181 Does support Determine the sample deviation rate, the computed upper deviation rate, and the auditor's conclusion (i.e., testing results do or do not support operating effectiveness of the control) for each control procedure. (For Results, use Table 8-8 & Table 8-9 or IDEA) (Round your rates values to 1 decimal place.) 0 156✔ 0 2.0 ✓✔ 94 94 % % % 4 10% 8% 4% 98 98 X Answer is not complete. Control Procedure 2 Does not support 5 181✔ 2.8 6.9 ✓ % % % 3 Does not support 4 94✔ 4.3 8.7 3 333 % % % 4 Does support 3 98✔✔…
The following are auditor judgments and attributes sampling results for six populations. Assume large population sizes. 1 2 3 4 5 6 EPER (in percent) 2 0.5 1 0 2 5 TER (in percent) 6 4 20 3 8 10 ARO (in percent) 10 5 10 5 5 10 Actual sample size 100 100 20 100 60 60 Actual number of exceptions in the sample 2 3 1 1 1 5 For each population, did the auditor select a smaller sample size than is indicated by using the attributes sampling tables in Table 15-8(p. 519) for determining sample size? What are the implications of selecting either a larger or smaller sample size than those determined using the tables? Calculate the SER and CUER for each population. For which of the six populations should the sample results be considered unacceptable? What options are available to the auditor? Why is analysis of the exceptions necessary even when the populations are considered acceptable? For…
1. Which of the following would be designed to estimate a numerical measurement of a population, such as monetary value?* A. Sampling for variables B. Sampling for attributes C. Sequential sampling D. Discovery sampling E. None of them
Suppose you're given a data set that classifies each sample unit into one of four categories: A, B, C, the data as A = 1, B=2, C = 3, and D=4. Are the data consisting of the classifications A, B, C, and D or quantitative? Are the data consisting of the classifications A, B, C, and D qualitiative or quantitative? OA. Qualitative, because they are measured on a naturally occuring numerical scale. B. Quantitative, because they are measured on a naturally occuring numerical scale. C. Quantitative, because they can only be classified into categories. D. Qualitative, because they can only be classified into categories. *** After the data are input as 1, 2, 3, or 4, are they qualitative or quantitative? OA. Qualitative, because they cannot be meaningfully added, subtracted, multiplied, or divided. B. Qualitative, because they are measured on a naturally occurring numerical scale. OC. Quantitative, because they are measured on a naturally occurring numerical scale. OD. Quantitative, because…
Complete the statement. The lower the risk of material misstatement, a. the greater the maximum tolerable misstatement b. the higher the audit risk required. c. the later in the year that principal audit test procedures are performed d. the smaller the sample size needed for substantive testing
Q5) Audit sampling is used in conjunction with many audit tests, and may be performed on a statistical or nonstatistical basis.a. Define the term audit sampling.b. List and explain two advantages of the use of statistical sampling as compared to non statistical sampling.
The sample size of the test of controls varies directly with: Expected Population Deviation Rate Tolerable Rate Risk of Assessing Control Risk Too Low A. Yes Yes No B. No No Yes C. Yes No No D. No Yes Yes E. Yes Yes Yes A B C D E
Auditors project the misstatements found in the sample tothe population when using statistical sampling, but not when usingnonstatistical sampling. TRUE OR FALSE? WHY?
1 Which of the following statements is NOT a characteristie of quantitative research? A. The results taken from a sample can be generalized to the population. B It delivers an in-depth understanding of the problem or study C. It provides a more credible and reliable result. D. Statistical analysis of numerical data. 2. Which statement below illustrates a weakness of quantitative research? A. The responses of the participants are limited to what has been asked and the choices given. B. The researcher's perspective can influence interpretation of results. C. Data gathering takes too much time. D. Low degree of subjectivity 3. Which of the following statements is NOT true about the importance of Quantitative Research? A. helps educators identify ways to improve learming. B. helps improve crop production using safe organic fertilizers. C helns nharmaceutical cnmnanies explore safe and effective medicines D. helps understand victims of domestic violence perception of satisfaction. 4. A…

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