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Assuming that audit software can be developed for use on Delphic Co’s systems, which of
the following procedures could be carried out on the receivables balance?Stratify the receivables balances and select an appropriate sample for testing
maam can you explain this, if possible with an example?
Audit software can do pretty much anything you can imagine. So for example, looking at the list of invoice values on page 67 of the notes, because it requires no judgment, a program can read each invoice value – add it to the cumulative total – and identify the items to be selected based on the auditor setting the sampling interval (and maybe the random start too – though the computer program could random select a start in the range 1 – 1,249).
So in a similar vein the computer could read the invoice values and sort them by size:
1-1000
101-500
501-1,000
1,001-1,500
>1,500The population will then be stratified. A computer-generated list of a sample for testing might then include all items in the top stratum and a random selection from each of the others (either based on a number to be selected pre-determined by the auditor or some other algorithm/parameters set by the auditor).
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