1) You are auditing the accounts receivable balance of a cable television provid
ID: 2381199 • Letter: 1
Question
1) You are auditing the accounts receivable balance of a cable television provider. Individual accounts receivables tend to be similar in amount to each other and cover one or two months of service charges. The client has a computerized billing system that makes it easy to access individual customer's records. The total accounts receivable balance makes up 23% of the firm's total assets. You did the audit for the firm last year and found few errors in their accounts receivable balance.
a) Would you use a sampling technique to test their balance and, if so, would you use statistical or non-statistical sampling? Explain your answer.
b) What method would you use to test an individual account balance and why?
Explanation / Answer
a)Yes I would use sampling technique to test their balance.
The sampling technique will be statistical sampling because sample allows us selecting a subset of a population of items for the purpose of making inferences to the whole population.
Hence we will select a particular sample size for sampling and carry out sampling in that sample by help of Multiple sampling test in which we know acceptance and rejectance number of each sample.
b)Individual account balance can be checked out by help of xbar andd R control charts since with the help of control chart we get the mean and upper and lower control limits and with the help of control chart we can easily found out the error in individual bill and take some corrective measures.
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.