Client: Pinnacle Manufacturing

Audit Area: Tests of Controls and Substantive Test of Transactions–Acquisitions.

Define the Objective(s): Examine vendors’ invoices, receiving reports, purchase orders, and other related documents

to determine whether the system has functioned as intended and as described in the audit program.

Define the population precisely (including stratification, if any): Vouchers from 1/1/2016 to 10/31/2016.

First voucher number – 6734. Last voucher number – 33722.

Define the sampling unit, organization of population items, and random selection procedures:

two errors on timing and and error in comparing the vendor’s invoice amount to the acquisitions journal that is not included as an attribute,

a larger than normal sample in year-end testing of accounts payable is appropriate.

Notes: 1. The planned audit variables are judmental. The results of the prior year from part III were used to decide EPER. Initial sample size and CUER are judgments.

2. There was an error discovered where there was no attribute. This happens in practice too. The auditor should not ignore the exception even though it is an unplanned discovery.