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Accounting 491 Audit Sampling and Evaluation of Mt. Hood Furniture's Inventory

A practical analysis of audit sampling techniques and evaluating Mt. Hood Furniture's inventory.

Amelia Davis
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A u d i tS a m p l i n gC a s eM e m o|1Accounting 491Audit Sampling and Evaluation of Mt. Hood Furniture'sInventoryIn the context of the Mt. Hood Furniture inventory audit, explain the process of determining thesample size, selecting a Probability Proportionate to Size (PPS)sample, and evaluating projectedpopulation misstatements. How do quantitative and qualitative factors influence the conclusionsdrawn from the sample? Be sure to include an explanation of the tolerable misstatement (TM),anticipated misstatement (AM), and the risk of incorrect acceptance.Word Count Requirement:Your response should be between 600-800 words.

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A u d i tS a m p l i n gC a s eM e m o|2Accounting491Week FiveDate:INTEROFFICE MEMORANDUMTO:John SmithFROM:Learning Team BSUBJECT:Mt. Hood Furniture Inventory SampleWorkpapersDATE:February 18, 2012The purpose of this memo is to summarize the findings of Mt. Hood Furniture’s finalinventory compilation. We have observed the inventory and are satisfied that the inventory wasaccurately counted. However, we needed to perform additional testing to ensure that thequantities were accurately recorded into the final accumulation and valuation of inventory andthat Mt. Hood Furniture’s inventory is correctly priced and accumulated. Our audit team willidentify the audit objectives, determine sample size, develop a risk of incorrect acceptancescenario, select a probability proportionate to size (PPS) sample, determine the amount ofprojected population misstatement, and develop a statistical and audit conclusion based on oursample.Audit Objectives
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Document Details

University
Grand Canyon University
Course
ACC 491
Subject
Accounting

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