Attributes Sampling

Assume that the internal auditor wishes to test the effectiveness of the internal control procedure of
matching receiving reports with purchase of invoices as a step in authorizing payments for purchases of
merchandise. They are interested in the clerical accuracy of the matching process and in determining
whether the control procedure that requires the matching of purchase invoices and receiving reports is
operating effectively.

The internal auditor define the deviation conditions as any one or more of the following with respect to
each invoice and related receiving report:

a. Any purchase invoice not supported by a receiving document.

b. Any invoice supported by a receiving document that is applicable to another invoice.
c. Any difference between the invoice and the receiving document as to quantities shipped.

The auditee prepares a serially numbered voucher for every purchase of materials. The receiving report
and purchase invoice are attached to each voucher. The population to be tested consist of 3,000
vouchers for purchases of materials for the first six months of the year under audit. Conservatively,
internal auditors use a five-year average for the expected deviation rate. Internal auditors observed that
exceptions for this type for the past five years is 1.00%, 2.00%, 3.00%, 4.00%, and 5.00%.

Considering all other relevant factors, the internal auditor decide upon a tolerable deviation rate of 6%.

Required:

1. Determine the sample size using Attribute Sampling Sample Size Table Guide by the AICPA at
a. 5% risk of assessing control risk too low.
b. 10% risk of assessing control risk too low.
2. How much is the allowable number of deviation based on the determined sample size at
a. 5% risk of assessing control risk too low.
b. 10% risk of assessing control risk too low.
3. Assume that the actual number of deviations found in the determined sample size is five (5),
how much then would be the upper deviation rate at
a. 5% risk of assessing control risk too low.
b. 10% risk of assessing control risk too low.
4. What is your evaluation /conclusion based on your answer on previous items at
a. 5% risk of assessing control risk too low.
b. 10% risk of assessing control risk too low.