You Are Auditing the Trading Security Investment Account for BCS,Inc

question 80

Essay

You are auditing the trading security investment account for BCS,Inc.for the year-ending December 31,2012.You have decided to audit the year-end balance in the account by reviewing a sample of transactions of additions and disposals in the account.A partial list of investments sold is given below.You also have a schedule of the beginning balance,additions for the year,disposals for the year,and the ending balance.You have decided to use a monetary unit sample.The random number generated for the sampling process is 468,384.The desired level of assurance is 90%.The ratio of estimated misstatement to tolerable misstatement is 0.05.The confidence factor is 2.52 from the table in the book.Tolerable misstatement is $2,300,000.Develop the complete sampling plan,describing what you will do for each step in the sampling plan.Describe how you would handle any errors found in your sample.You should select the first three sample items using systematic random sampling. $$\begin{array} { | l | l | l | l | l | } \hline & \begin{array} { l } \text { Balance } \\1 / 1 / 2012\end{array} & \text { Additions } & \text { Disposals } & \begin{array} { l } \text { Balance } \\12 / 31 / 12\end{array} \\\hline \begin{array} { l } \text { Trading } \\\text { securities }\end{array} & 23,284,417 & 25,543,762 & 17,532,175 & 31,296,004 \\\hline\end{array}$$ Partial Schedule of Investments Sold During the Year: $\begin{array}{|l|l|l|r|r|}\hline \text { Security } & \begin{array}{l}\text { Date } \\\text { Purchased }\end{array} & \text { Date Sold } & \text { Purchase Price } & {\text { Sales Price }} \\\hline \text { IBM } & 6 / 30 / 11 & 3 / 31 / 12 & 234,777 & 320,132 \\\hline \text { Dell Computers } & 9 / 30 / 11 & 3 / 31 / 12 & 126,432 & 115,328 \\\hline \text { eBay } & 6 / 30 / 11 & 3 / 31 / 12 & 178,963 & 215,591 \\\hline \text { Google } & 3 / 31 / 11 & 3 / 31 / 12 & 224,431 & 320,763 \\\hline \text { Microsoft } & 12 / 31 / 11 & 6 / 30 / 12 & 65,784 & 125,583 \\\hline \text { Berkshire Hathaway } & 9 / 30 / 11 & 6 / 30 / 12 & 326,221 & 356,328 \\\hline \text { General Motors } & 6 / 30 / 11 & 6 / 30 / 12 & 113,476 & 126,644 \\\hline \text { General Electric } & 12 / 31 / 11 & 6 / 30 / 12 & 264,431 & 374,823 \\\hline \text { Edison } & 9 / 30 / 11 & 9 / 30 / 12 & 24,673 & 22,774 \\\hline \text { Tennant Company } & 3 / 31 / 11 & 9 / 30 / 12 & 31,433 & 57,532 \\\hline \text { General Mills } & 3 / 31 / 11 & 9 / 30 / 12 & 157,521 & 134,567 \\\hline \text { Burger King } & 6 / 30 / 11 & 12 / 31 / 12 & 348,433 & 531,783 \\\hline \text { Trader Joe's } & 12 / 31 / 11 & 12 / 31 / 12 & 379,538 & 351,883 \\\hline \text { L.L. Bean } & 9 / 30 / 11 & 12 / 31 / 12 & 24,731 & 42,553 \\\hline \text { Home Depot } & 3 / 31 / 11 & 12 / 31 / 12 & 237,857 & 241,673 \\\hline \text { Costco } & 6 / 30 / 11 & 12 / 31 / 12 & 258,663 & 226,761 \\\hline\end{array}$

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Definitions:

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Technology Developers

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