Marjorie A.

Pagsinuhin
46234

AUDIT SAMPLING PLAN

1. Internal Control Being Tested

Test of control is being tested to confirm the efficiency and effectiveness
of the financial statements presented.
In this sampling plan, test of controls is applied to Purchase Orders to
determine whether all purchase orders are authorized. The signature indicates
that the manager has approved the purchase and that the purchase is consistent
with the organization’s mission.

2. Control Objectives
a. Occurrence – Transaction and events that have been recorded have
occurred and pertain to the entity.
b. Accuracy – Whether amounts and other data relating to recorded
transactions and events have been recorded appropriately.
c. Classification - Transactions and events have been recorded in the
proper accounts.

3. Population and Sampling Unit

Since it is indicated that the range of purchase order numbers to be
selected from is 10,306-14,921, the population of orders is 4,616.
According to the Statistical Sample Sizes for Test of Control Table at 5%
Risk of Overreliance with expected deviation rate of 3.5% and tolerable deviation
rate of 15%, the sample size should be 40. Based on this, the number of random
numbers selected in the Excel function is also 40, however, the number of
samples given in the picture is reduced to 31 samples. This number would be the
basis of my sampling and test of control.
4. Deviation Condition
Purchase orders without signature indicates a deviation condition.

5. Desired Level of Assurance = 95% Risk of Overreliance = 5%

Tolerable Deviation Rate = 15%
Expected Deviation Rate = 3.5%

6. Method for Determining Sample Size

The method for determining the sample size is based on Statistical
Sample Sizes for Test of Control Table at 5% Risk of Overreliance using the
given expected and tolerable deviation rate.

7. Method of Sampling Selection

Marjorie A. Pagsinuhin
46234

Generated 40 random numbers to select purchase order numbers in the

range 10,306 to 14,921 using Excel RANDBETWEEN function. But as stated
earlier, the given number of samples in the picture is reduced to 31.
8. Selected Sample Items
Purchase No. (in no particular order)
13498 13157 11484 11962 11592 14444 11205
13418 14782 12434 14181 10626 10856 14204
11809 13754 10767 11838 12617 11323 11059
10717 13096 14745 12410 12247 11313 10543
12666 13553 12295

Out of 31 purchase orders: two (2) are missing, PO no. 11205 and 10543; three
(3) have no signatures, and two (2) items are considered to be not consistent with the
company’s mission but were already recorded as travel and entertainment expense.

9. How Sampling Procedure is Performed

The sampling procedure performed used the RANDBETWEEN function.
The Microsoft Excel RANDBETWEEN function returns a random number that is
between a bottom and top range. The RANDBETWEEN function returns a new
random number each time your spreadsheet recalculates.
10. Evaluate Sample Results

A. Sample deviation rate = 24/27 (excluding missing items and travel and
manager’s purchase order.
sample deviation rate = 11.11%
B. Compare SDR and TDR =
SDR = 11.11% TDR = 15%
There is no indicated allowance for sample risk, thus, the maximum
deviation rate is 11.11%
In conclusion, the auditor can rely on the client’s internal control system
for purchase orders.