Kim Is a Senior Auditor at the Wing CPA Firm

question 85

Essay

Kim is a senior auditor at the Wing CPA firm. She is in charge of formulating
the audit plan for several key controls and accounts. Her manager has determined
that if any of the accounts she is working on are misstated by $20,000 the misstatement
is material. The account includes some unusual and significant transactions that
have occurred during the year. Kim wants to utilize sampling for her testing.
Required:
(a) How can Kim stratify the transactions in the account to best utilize sampling?
(b)What is sampling risk? How might it affect the audit conclusions Kim makes based
on the control tests?
(c) If Kim misses anything as a result of sampling, what audit procedures might
uncover the error during the ICFR audit? During the financial statement audit?

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Definitions:

Harlem Renaissance

A cultural, social, and artistic explosion centered in Harlem, New York, during the 1920s, marking a period of rich cultural growth among African Americans.

René Maran

A French writer of Guyanese descent who won the 1921 Goncourt Prize for his novel "Batouala," a pioneering work that represented a significant breakthrough in representing African culture and critiques of colonialism.

Jessie Redmond Fauset

A leading figure in the Harlem Renaissance, an African American editor, poet, essayist, and novelist who played a pivotal role in nurturing young black authors.

Black Artistic Creativity

The diverse range of creative works produced by African Americans, exploring themes of cultural identity, racism, and social justice.