
MATLAB: An Introduction with Applications
6th Edition
ISBN: 9781119256830
Author: Amos Gilat
Publisher: John Wiley & Sons Inc
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b. Calculate the
Tolerable misstatement | $ | 15,000 | |
Expected misstatement | $ | 6,000 | |
Desired confidence level | 95 | % | |
Recorded amount of accounts receivable | $ | 300,000 | |

Transcribed Image Text:**Statistical Sample Sizes for Attribute Sampling — 95-Percent Desired Confidence Level (i.e., 5-Percent Risk of Incorrect Acceptance)**
**Table 8-5**
This table provides statistical sample sizes necessary for attribute sampling under various conditions, specifically with a 95% desired confidence level (equating to a 5% risk of incorrect acceptance). It is used in auditing and quality control environments to determine the number of samples that need to be tested to make reliable inferences about a population.
**Headers:**
- **Expected Population Deviation Rate**: The anticipated rate of deviation within the population.
- **Tolerable Deviation Rate**: The rate of deviation that the auditor is willing to accept.
**Columns:**
- **Expected Population Deviation Rate**: Ranges from 0.00% to 7.00%.
- **Tolerable Deviation Rate**: Varies from 2% to 20%.
Each cell within the table contains two values:
- First value: Indicates the required sample size.
- Value in parentheses: Indicates the maximum number of deviations allowable in the sample for the auditor to conclude that the tolerable deviation rate is not exceeded.
**Important Notes:**
- An asterisk (*) indicates that the sample size required is too large to be cost-effective for most audit purposes.
- The number in parentheses is crucial as it represents the maximum tolerable deviations in the sample size.
For example:
- For an **Expected Population Deviation Rate** of 0.00% and a **Tolerable Deviation Rate** of 2%, the required sample size is 149, and 0 deviations are acceptable.
- Conversely, for the same deviation rate expectation and a tolerable deviation rate of 20%, the required sample size significantly decreases to 14 with 0 deviations acceptable.
**Practical Application:**
Auditors can use this table to determine the number of items to sample when assessing control procedures. If an auditor expects a 1% population deviation and can tolerate a 5% deviation rate, they would need a sample size of 93, accepting up to 1 deviation (see the intersection between the 1.00% row and the 5% column).
**Conclusion:**
This table is a critical resource for ensuring that audits are both effective and efficient, helping auditors to balance between the necessary level of assurance and practical constraints like time and cost.
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