An Auditor Is Selecting a Random Sample of Cash Disbursements

question 63

Multiple Choice

An auditor is selecting a random sample of cash disbursements. One of the corresponding source documents for a selected random number is a voided cheque. The auditor should:

• A) treat the cheque as a deviation.
• B) reduce the sample size by one.
• C) select the cheque immediately before or after the one that corresponds to the random number.
• D) None of the given answers.

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Definitions:

Decentralization

The distribution of decision-making powers and operational responsibilities away from a central authority to individual units or levels within an organization or system.

External Environment

All external forces or factors that impact an organization's performance, including competition, economy, laws, and social trends.

Diverse Environments

Contexts or settings characterized by a wide range of differences, including cultural, biological, social, and ecological variation.

Mechanistic Structures

Organizational designs characterized by rigid hierarchies, strict rules, and clear, centralized decision-making processes.