Risk Assessment and Audit Decision

Sample Selection

Required: a) What is the risk of incorrect acceptance for Robert and for Donna and which auditor will have to collect the most evidence (explain your reasoning)? Please prepare Robert's assessment & sample selection b) Using Donna’s assessment, complete the following schedule (if necessary, round sample size per table up for sample size to use) Attribute 1 Attribute 2 Risk of assessing control risk too low Tolerable deviation rate Expected population deviation rate Sample size per table Sample size used Number of deviations identified Sample deviation rate (SDR) Achieved upper deviation rate c) Evaluate the sample results for the 2 attributes. What statistical conclusion do you make for each attribute? d) What is the audit decision you would make based on the quantitative sample results for each attribute? Include in your answer what recommendations might be made regarding the use of Risk Management Techniques. e) Compare the SDR results you calculated for Donna to that using Robert’s assessments. Briefly discuss the difference in SDR results in terms of the costs and benefits of audit work. f) List the two types of computer-assisted audit techniques (CAATs) and three prerequisites to be met before the internal auditor can consider using (CAATs)