For the attached file containing a list of all payments to suppliers for the year 2017, complete the 7 steps in attribute sampling with the following guidance.
Step 1. Define the attributes of interest and what constitutes failure.
- before authorizing payment, the accounts payable department must match the details of the vendor invoice with a purchase order and a receiving report.
- to document the matching control, the accounts payable clerk staples together copies of (1) the check (2) the purchase order, and (3) the invoice, and files this collection of documents alphabetically by supplier in the accounts payable department.
Step 2: Define the population from which the sample is to be taken.
- The attached file contains the population
Step 3: Determine the sample size.
- Risk of assessing control risk too low = 5 percent
- Tolerable Deviation Rate = 10 percent
- Expected Population Deviation Rate = 6 percent
Step 4: Determine the method of selecting the sample
- create 5 unique samples using the 5 techniques below. Create a
separate worksheet for each sample.
- simple random sampling (hint: you can use the =rand() formula in Excel. Enter the rand() formula> paste values> sort by pasted values> take the top observations)
- systematic random sampling (hint: you can select every nth observation)
- haphazard sampling
- block sampling
- stratification sampling
Step 5: Select the sample items and perform the test of control
- you will not actually perform the test to see if the matching procedure was followed. However, there is a column in the data set that gives you the result of the test (either FAIL or PASS).
Step 6: Evaluate the sample results and consider the effect on planned substantive procedures
- perform a quantitative evaluation to determine whether the failure rate is acceptable for each sample.
- do not attempt a qualitative evaluation
Step 7: Document all phases of the sampling process
