During the audit planning of Vailoaoi Ltd, a manufacturer of miniature water fountains, the audit...
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Accounting
During the audit planning of Vailoaoi Ltd, a manufacturer of miniature water fountains, the audit team highlighted the following matters:
1. The audit partner wishes to place greater reliance on the control structure of non-current assets, arguing that the control risk assessment can be decreased from medium to low if adequate control testing is performed.
2. Your client has warehouses in both Port Vila and Santo. In the previous year the audit team attended a stocktake at only the Port Vila warehouse. One substantive stocktake procedure involved a selection of 50 items from the inventory report. Three errors were identified and projected over the whole population. This year the manager has suggested testing both sites.
3. A number of inventory cut-off errors were noted in the previous year. The planning process has identified that this may be an issue this year. 4. Even though the value has remained constant, the number of debtors accounts has doubled from 900 to 1800 in the last year.
Required: Discuss the effect of each of the above matters on the auditors selection of sample size and population for testing.
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