Essay on Swot Analysis Of Seagrass Company Audit
965 Words Apr 3rd, 2016 4 Pages
Seagrass Company employs Carol Jones, an independent Certified Public Accountant (CPA) to conduct the organization’s annual accounting audit. In conducting accounting audits, auditors employ sampling strategies of key general ledger accounts and transactions to determine the effectiveness of internal controls, accuracy of data, and detect potential misstatements and fraudulent activities. Examination of Ms. Jones’ completed audit reveals incorrect assumptions, statements, and inappropriate application of audit procedures.
Monetary Unit Sampling Sampling is an essential tool in effectively auditing accounting records of an organization. Said tool is utilized to test the internal control procedures, account balances, and assertions of the organization through review of a select number of transactions within the audit period (Johnston, Gramling & Rittenberg, 2014). As such, samples must be a representation of the population of transactions to assist the auditor in making accurate assumptions of the financial condition of the organization. Sampling data is not without risks. Incorrectly applying sampling procedures and failure to utilize a representative sample will produce inaccurate assumptions of audit data (Johnston, Gramling & Rittenberg, 2014). Ms. Jones is utilizing sampling to conduct her audit of Seagrass Company accounts receivable.
The sampling technique utilized is monetary unit sampling (MUS), which samples randomly selected…