An Auditor Plans to Examine a Sample of 40 Canceled

question 116

Multiple Choice

An auditor plans to examine a sample of 40 canceled checks for a countersignature which is prescribed in the client's control procedures manual.Two of the checks in sample cannot be located by the company or the auditor.The auditor would most likely:

• A)treat the missing checks as a deviation when evaluating the results of the sample.
• B)draw a conclusion on a sample size of 38.
• C)substitute two more checks to get to a sample size of 40.
• D)recalculate the sample excluding the original 40 checks.

---

Definitions:

Financial Transactions

The exchange of monetary assets between parties, including buying, selling, or trading of goods, services, or financial instruments.

Used Goods

Items that have been previously owned and utilized by another party, often sold at a lower price than equivalent new items.

National Income

The total income earned by a country's residents and businesses, including wages, profits, and taxes minus subsidies, within a specific time period.

Corporate Profits

The total income earned by companies after all expenses and taxes have been deducted, indicative of business health and economic conditions.