Sampling

Question 1

Risk of assessing control too low = Risk the auditor is willing to accept. Was 5%,revised to 1%, means auditor is willing to accept less risk, and sample size will increase

Answer 1

Increase sample size

Question 2

Tolerable misstatement was $2000 now $2500. Auditor is willing to accept more risk and sample size will be decreased

Answer 2

Sample size will decrease

Question 3

Sample divination rate = Number of errors/sample size

Upper deviation rate= Sample divination rate+allowance for sampling risk

If tolerable deviation rate is more than expected deviation rate+allowance for sampling risk it means control is operating effectively

Everage error per account * number of accounts=projected error

Point estimate for the true population value. Total $/1.01 (1% average overstatement error)

Total projected error : if sample is more than sampling interval, take error as it is, if sample is less than sampling interval= error/sample and take this % * sampling interval

Answer 3

Simulation sampling