Audit Sampling:Describe each of Silly Sally’s Sampling Assumptions and Audit Slip-ups (Number each error and show calculations when necessary.

To estimate the population deviation rate and the achieved upper deviation rate, Sally decided to apply the discovery sampling method with an expected population deviation rate of 3 percent for the 8,000 shipping documents, and she decided to defer consideration of the risk of assessing control risk too low until the sample results had been evaluated. Sally used the tolerable rate, the population size, and the expected population deviation rate to determine that a sample size of 80 would be sufficient. When it was subsequently determined that the actual population was about 10,000 shipping documents, Sally increased the sample size to 100.

In evaluating the sampling results, Sally made the initial determination that a reliability level of 95 percent (risk of assessing control risk too low of 5 percent) was desired and, using the appropriate statistical sampling table, determined that for 8 observed deviations from a sample size of 100, the achieved upper deviation rate was 14 percent. Sally then calculated the allowance for sampling risk (5 percent), the difference between the actual sample deviation rate (8 percent), and the expected deviation rate (3 percent). Sally reasoned that the actual sample deviation rate (8 percent) plus the allowance for sampling risk (5 percent) was less than the achieved upper deviation rate (14 percent); therefore, the sample supported a low level of control risk.

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