During the audit of a company, CA Z is using a software to select samples pertaining to sales records of the company. While performing this process,…
CA Intermediate · Auditing and Ethics · MTP · September 2024
During the audit of a company, CA Z is using a software to select samples pertaining to sales records of the company. While performing this process, a window opens in software prompting the user to enter certain information. CA Z is in the process of entering information in this regard as given under: - Selection Interval ? Number of records to select 100 Starting record number to select 1 Ending record number to select 1000 File name Sales Going through the above fields, which method of sampling is likely being used in the software? Discuss. Which foremost consideration should be kept in mind by auditor for selecting samples in such a manner? Additionally, partner of CA Z suggested him to select the first 200 sales invoices from the sales book of the last month. Which method of sampling is being suggested by partner of CA Z?
Suggested Answer and Working Notes:
In the given case, method of sampling being used in software is known as interval sampling or systematic sampling. It is a selection method in which the number of sampling units in the population is divided by the sample size to give a sampling interval. Sampling interval = Sampling units in population/Sample size i.e 1000/100 Sampling interval = 10 Records selected = 100 Software would pick every 10th record from 1 to 1000 records. When using this method, the auditor would need to determine that sampling units within the population are not structured in such a way that the sampling interval corresponds with a particular pattern in the population. Further, partner of CA Z suggested him to select the first 200 sales invoices from the sales book for the last month. He is suggesting him block sampling for sales, this method involves selection of a block(s) of contiguous items from within the population.
Topics: Audit Evidence
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