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Posted: October 9th, 2022
Project
`7
An auditor used a
nonstatistical sampling plan to audit the inventory of an auto supply company.
The auditor tested the recorded cost of a sample of inventory items by
reference to vendors’ invoices. In performing the test, the auditor verified
all the items on two pages selected at random from the client’s 257-page
inventory listing. The sampling plan resulted in a test of $50,000 of the total
book value of $5,000,000, and the auditor found a total of $5,000 in
overstatements in the sample. Since the senior indicated that the amount of a
material misstatement in the inventory account was $100,000, the auditor
concluded that the recorded inventory value was materially correct.
Evaluate
the auditor’s sampling plan and the manner in which the results were evaluated.
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