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Stratify receivables balances and select a sample

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA AA Exams › Stratify receivables balances and select a sample

  • This topic has 1 reply, 2 voices, and was last updated 1 year ago by Kim Smith.
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  • August 10, 2021 at 2:54 pm #631060
    Noah098
    Member
    • Topics: 935
    • Replies: 352
    • ☆☆☆☆☆

    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?

    August 10, 2021 at 3:16 pm #631064
    Kim Smith
    Keymaster
    • Topics: 100
    • Replies: 6794
    • ☆☆☆☆☆

    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
    >1,500

    The 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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