The Burke CPA firm is auditing Cabrera, Inc. The company is a manufacturer. It manufactures rubber ducks and ships them to retailers e.g. Toys R Us. There should be a shipping document to go with every sales invoice. The firm tentatively plans to rely on this internal control procedure. To test this internal control procedure, Burke decides to use attribute sampling. The firm decides, based on last year’s audit, on a 90% confidence level. The firm expects that 2% of the time, this internal control procedure does not operate effectively. The firm sets a tolerable deviation rate of 7%. What is the required sample size?
The Burke CPA firm is auditing Cabrera, Inc. The company is a manufacturer. It manufactures rubber ducks and ships them to retailers e.g. Toys R Us. There should be a shipping document to go with every sales invoice. The firm tentatively plans to rely on this internal control procedure. To test this internal control procedure, Burke decides to use attribute sampling. The firm decides, based on last year’s audit, on a 90% confidence level. The firm expects that 2% of the time, this internal control procedure does not operate effectively. The firm sets a tolerable deviation rate of 7%. What is the required sample size?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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The Burke CPA firm is auditing Cabrera, Inc. The company is a manufacturer. It manufactures rubber ducks and ships them to retailers e.g. Toys R Us. There should be a shipping document to go with every sales invoice. The firm tentatively plans to rely on this internal control procedure. To test this internal control procedure, Burke decides to use attribute sampling. The firm decides, based on last year’s audit, on a 90% confidence level. The firm expects that 2% of the time, this internal control procedure does not operate effectively. The firm sets a tolerable deviation rate of 7%. What is the required sample size ?
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