Which of the following courses of action would an audit team most likely follow in planning a sample of cash disbursements if the audit team is aware of several unusually large cash disbursements?
A) Increase the sample size to reduce the effect of the unusually large disbursements.
B) Continue to draw new samples until all unusually large disbursements appear in the sample.
C) Set the tolerable rate of deviation at a lower level than originally planned.
D) Stratify the cash disbursements population so that the unusually large disbursements are selected.

Question

Quizplus · Accepted Answer

Stratifying the cash disbursement population would ensure that the unusually large disbursements are selected. This would provide a more representative sample and increase the likelihood of detecting any errors or irregularities associated with these transactions. Increasing the sample size or drawing new samples until all large disbursements appear in the sample would not necessarily address the issue of representativeness. Setting the tolerable rate of deviation at a lower level than originally planned would require a more rigorous analysis of risk and materiality thresholds.

Which of the Following Courses of Action Would an Audit