TUTORIAL

CHAPTER 11
 Customer Balance ($) Cumulative Selected (Y/N)
total ($)
1 60,000
2 70,000
3 90,000
4 105,000

Tutorial: 5
6
7
8
28,000
100,000
46,000
1,000

Selecting 9
10
11
84,000
94,000
108,000

samples
12 34,000
13 160,000
14 20,000
1,000,000

You are the auditor of BelieveMe Co and are intending to audit receivables by external confirmation of a
sample of the year-end balances.
The trade receivables on the next slide have been randomly tabulated. At the year-end, trade receivables
amount to $1 million and materiality is set at three (3) stages that are $150,000, $250,000 and $350,000.
State which receivables balances will be selected for sampling using valued-weighted selection (monetary unit
sampling) at each materiality level.
Question: Evaluation of
results (Tests of details)
You are auditing trade receivables and have obtained the following results based on your sample:
•Total value of population $1,800,000
•Number of items in the population 500
•Number of items tested 36
•Sample value $460,000
•Error in sample $30,000

(a) Assuming the errors are not anomalous ones, calculate the expected error in the population.
(b) Assuming that tolerable misstatement was set at $120,000, explain what action should be
taken.
(b) Assuming that tolerable misstatement was set at $100,000, explain what action should be
taken.
Question: Evaluation of results
(Tests of Controls)
Total number of 2,600
adjustments made to
inventory records during the
You are auditing the internal controls relating to the year
authorisation of adjustments made to a client's
inventory system to determine the adjustments'
accuracy and validity. You have obtained the
Number of adjustments 500
following results based on your sample tested in the sample
(a) Assuming the errors are not anomalous ones,
calculate the error rate in the population. Number of occasions when 30
(b) Assuming that the tolerable rate of deviation was adjustments tested were not
set at an error rate of 4%, explain what action
should be taken. authorised
(c) Assuming that the tolerable rate of deviation was
set at an error rate of 8%, explain what action
should be taken.
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20 Mar 2024