Your audit of Italian Hospital Group (IHG) includes examining whether accounts receivable is misstated. As part of your procedures, you decide to use stratified sampling. The accounts receivable subsidiary ledger shows the following accounts, separated by strata:
The auditor decides that internal controls are relatively weak, so the tolerable misstatement is $25,000 (about 3% of the population). As a result, all five accounts in the first stratum will be separately examined. Based on the risk of incorrect acceptance, the auditor determines the appropriate confidence factor to use is 2.4.
a. Which strata should be selected for use in the sampling procedures?
b. Following your answer to part (a), calculate the required sample size for selected strata based on the following non-statistical formula to determine sample size:
c. If the auditor had instead determined that the internal controls are relatively strong and that the tolerable misstatement is $75,000 and the appropriate confidence factor is 1.7, how does that change the sampling and sample size?
Delivering a high-quality product at a reasonable price is not enough anymore.
That’s why we have developed 5 beneficial guarantees that will make your experience with our service enjoyable, easy, and safe.
You have to be 100% sure of the quality of your product to give a money-back guarantee. This describes us perfectly. Make sure that this guarantee is totally transparent.
Read moreEach paper is composed from scratch, according to your instructions. It is then checked by our plagiarism-detection software. There is no gap where plagiarism could squeeze in.
Read moreThanks to our free revisions, there is no way for you to be unsatisfied. We will work on your paper until you are completely happy with the result.
Read moreYour email is safe, as we store it according to international data protection rules. Your bank details are secure, as we use only reliable payment systems.
Read moreBy sending us your money, you buy the service we provide. Check out our terms and conditions if you prefer business talks to be laid out in official language.
Read more