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Following audit procedure is listed in audit plan
Identify all receivable balance over $200 and for those customers inspect after date cash receipts to identify whether payment has been received post year end
Which of the following statement is true
a) testing balance over $200 will ensure a sufficiently large sample size is tested
b) testing all invoices over $200 represents statistical testing
c) this method demonstrates use of stratified sampling
d) this method is form of selectionSir, correct ans is d but please can you explain me
A – not correct. What if all balances are <180?
B – not correct. Statistical = random and here you are deliberately excluding some.
C – not correct. Stratified means selecting invoices from a number of different strata such as 10 from Bal <200, 20 from 200 – 1,000, 10 for >1,000D – it is simply a way they have decided to select invoices – not necessarily a good way.
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