Derick has asked you to complete the sampling plan worksheet that he began earlier. This worksheet (WP C) file is labeled 20X9_atrib.xlsx (Link).

Derick has asked you to complete the sampling plan worksheet that he began earlier. This

worksheet (WP C) file is labeled 20X9_atrib.xlsx (Link). He has defined the sampling unit as

the prenumbered sales invoice, and the relevant attributes as:

1. Bill of lading attached and signed by the carrier;

2. Product prices in agreement with master price list stored in computer;

3. Extensions and footings correct;

4. Quantities and product type in agreement with customer order; and

5. Customer balance within the authorized credit limit.

You are NOT required to perform the sample selection process. In this Module the sample has

already been selected and has already been audited. The following information lets you know

what would have been done as part of the sample selection process. The population for attribute

sampling purposes is the numeric file of sales invoices. During 20X9, 22,400 sales invoices were

processed, with document numbers ranging from 10610 to 33009 inclusive. For each sales

invoice number drawn at random and included in the sample, you would request the client to

supply the invoice/bill of lading packet and the corresponding customer order. The sales

invoice/bill of lading packet could be obtained from the numeric file maintained in CBIS. The

customer order, the number of which appears on the face of the invoice, is stored in the computer

and could be printed out on demand. You then would examine the documents for the above

attributes.

Requirements

1. Based on the deficiencies in the design of controls identified in the sales processing subset of

the revenue cycle as explained in the first two paragraphs of this module, does the sampling plan

and testing described in the previous paragraph address all relevant financial statement assertions

related to sales and accounts receivable? If not, which assertion(s) are not considered in the

initial plan, and how could the plan be adjusted to address these assertions?

2. Retrieve the file titled "20X9_attrib." (Link) Using the sample size and sample evaluation

tables from our textbook and the following data, complete the attribute sampling plan worksheet

(in using the "Sample Results Evaluation" table, select the sample size that is closest to your

sample size):

a. The auditor sets the risk of overreliance at 5% (implying that the auditor is willing to accept a

5% chance that inferences from the sample will be incorrect). A 5% risk of overreliance

(sampling risk) is reflected in the 20X9_attrib file.

b. Misstatements have been defined, and expected deviation rates set for each attribute as

follows:

1) Bill of lading not attached to packet: 1%

2) Incorrect prices: 1%

3) Extension and/or footing errors: 0.5%

4) Quantities and/or product type not in agreement with customer order: 1%

5) Customer balance exceeds authorized credit limit: 1.5%

c. Tolerable deviation rates (sometimes referred to as the tolerable failure rate) of 4% have been

set for all attributes; and

d. Assume that the sample has already been selected and audited and the following

misstatements were found in examining the sample:

Sales Order Number Misstatement

12511

Bill of lading not signed by carrier

15439

Invoice causing customer to exceed authorized credit limit

18616

Bill of lading missing

23468

Bill of lading missing

27891

Bill of lading missing

3. What conclusions can you draw based on your completed sampling plan worksheet? What

impact might your findings have on the substantive audit programs for Brony's Bikes? Based on

the results of your testing, should the aggregate materiality threshold be changed for any part of

the revenue cycle?