Sample Size and Sampling Interval Determination: Monetary Unit Sampling. CaseyPaul is considering the use of MUS in examining Stanley’s accounts receivable, which wererecorded at $300,000. Using the audit risk model, Paul has identified a necessary risk ofincorrect acceptance of 10 percent and has established a tolerable misstatement of $25,000and an expected misstatement of $10,000.Required:a. Determine the necessary sample size for the audit of Stanley’s accounts receivable.b. Based on the sample size determined in part (a), what is the appropriate sampling interval?c. Briefly describe how Paul would select the sample from a computerized customer listthat Stanley maintains.d. How would each of the following changes in Paul’s sampling plan impact the sample size andsampling interval? For each change, use the original parameters noted in the problem. (Verifyyour answer by calculating the sample size associated with each change.)1. A reduction in the necessary level of the risk of incorrect acceptance to 5 percent.2. An increase in the expected misstatement to $12,500.3. A decrease in the tolerable misstatement to $20,000.
Paul is considering the use of MUS in examining Stanley’s
recorded at $300,000. Using the audit risk model, Paul has identified a necessary risk of
incorrect acceptance of 10 percent and has established a tolerable misstatement of $25,000
and an expected misstatement of $10,000.
Required:
a. Determine the necessary sample size for the audit of Stanley’s accounts receivable.
b. Based on the sample size determined in part (a), what is the appropriate sampling interval?
c. Briefly describe how Paul would select the sample from a computerized customer list
that Stanley maintains.
d. How would each of the following changes in Paul’s sampling plan impact the sample size and
sampling interval? For each change, use the original parameters noted in the problem. (Verify
your answer by calculating the sample size associated with each change.)
1. A reduction in the necessary level of the risk of incorrect acceptance to 5 percent.
2. An increase in the expected misstatement to $12,500.
3. A decrease in the tolerable misstatement to $20,000.
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