Assume a client's internal controls require each sales invoice to be supporting by a shipping document prepared by an outside company, but the clerk preparing sales invoices fails to follow this procedure exactly 3 percent of the time. If the auditor selects a sample of 100 sales invoices and finds two or four sales invoices are missing a shipping document, the sample is nonrepresentative of the population.

Question

Quizplus · Accepted Answer

The sample size of 100 is sufficient to detect any significant deviation from the 3 percent error rate. Finding two or four sales invoices missing a shipping document in a sample of 100 does not necessarily indicate a nonrepresentative sample, as this could still fall within the expected margin of error.

Assume a Client's Internal Controls Require Each Sales Invoice to Be