Which of the factors appears to have the greatest effect on the CUER? Which one appears to have the least effect?

The questions below relate to determining the CUER in audit sampling for tests of controls, using the following table:
1 2 3 4 5 6 7 8
ARO (in percent) 5 5 10 5 5 5 5 5
Population size 50,000 500 5,000 5,000 5,000 900 5,000 500
Sample size 200 100 200 200 50 100 100 25
Number of exceptions 3 2 4 4 1 10 1 0
Required
In-class
Discussion
Required
530Part 3 / APPLICATION OF THE AUDIT PROCESS TO THE SALES AND COLLECTION CYCLE
a. Using nonstatistical sampling, calculate TER – SER for each of columns 1 through 8 and evaluate whether or not the calculated allowance for sampling risk is large enough to accept the population. Assume that TER is 5 percent for each column.
b. For each of columns 1 through 8, determine CUER using attributes sampling from the appropriate part of Table 15-9 (p. 521).
c. Using your understanding of the relationship between the four preceding factors and the CUER, state the effect on the CUER (increase or decrease) of changing each of the following factors while the other three are held constant:
(1) A decrease in the ARO
(2) A decrease in the population size
(3) A decrease in the sample size
(4) A decrease in the number of exceptions in the sample
d. Compare your answers in part c. with the results you determined in part a. or part b. Which of the factors appears to have the greatest effect on the CUER? Which one appears to have the least effect?
e. Why is it necessary to compare the CUER with the TER?

Last Completed Projects