Auditing and Assurance Services 1st Edition by Iris Stuart

تمرين 28

Auditing adjusting journal entries. During your audit of the financial reporting process, you notice several adjusting journal entries recorded in the accounts at the end of each quarter and the end of the year. You decide to test them.
a. Prepare a sampling plan for the adjusting journal entries. The desired level of assurance is 90% (10% risk of incorrect acceptance). The ratio of estimated misstatement to tolerable misstatement is 0.00. Materiality is $1,000,000. The auditor uses 75% of materiality as tolerable misstatement. The adjusting entries total $4,800,000. There are 70 adjusting entries. 15 entries for each of the first three quarters and 25 entries at year end.
b. Explain how you will evaluate the results of your sample.