Nano Case 3 

Old Rock
Bakery
Beeva Rahman 12219322
What is the procedure that Joe Jones
would follow when his initial testing
showed a relatively high deviation rate for
the Old Rock Bakery transactions?
•As there is a high deviation rate for Old
Rock Bakery transactions, Joe is most likely
to calculate the deviation rate and compare
it with a tolerable rate of deviation. If the
tolerable deviation rate is surpassed, Joe
would have to collect further evidence
through running a larger sample. And,
again, if the result of the larger sample
shows the same deviation rate, depending
on the result, Joe would have to conclude
whether there is a case of material
mismanagement or misstatement. If Joe
wishes to search for a different conclusion,
he will have to continue conducting his
investigation with much larger samples.
What is statistical
sampling ?
Non-statistical sampling is any sample where
the sample items are not selected according to
the laws of chance, by probability, that is
based on the examiner's judgment. Factors
such as sample size, items selected, result
methodology is up to the examiner. Cases
usually consist of unique or sensitive
information depending on the type of
business, which is why a pre-formatted
formula will not be helpful when making a
sound evaluation. 
Describe the non-statistical sampling
methods that were open to Joe and his
team for the Rohr Industries audit.
In case Joe doesn't proceed with
statistical sampling, Joe could
avail himself to Judgemental
selection, which is applicable only
if Joe has prior experience with
Rohr Industries, so he could
carefully select a sample. Or Joe
could try the Haphazard selection
method, in which Joe will have to
pick a sample without any
influence or bias. The results are
usually unpredictable, and there
are apparent risks to choosing this
method.
Which of Joe’s two clients’
systems would lend themselves to
stratification? 
Both systems Joe’s applied to his clients could
lend to stratification due to High and Low risk
items. This will be the results of when Joe
concluded that the deviation rate of 12
exceptions in a sample of 80 transactions and
the remaining samples that were deemed to be
regular transactions, respectively. 

Thank You !