The steps in nonstatistical sampling for tests of details of balances and for tests of controls are almost identical. the major differences are that sampling for tests of controls deals with exceptions and samplingfor tests of details of balances concerns dollar amounts. this results in differences in the application of the two methods, but not the steps. because of thesedifferences, tests of controls and substantive tests of transactions are designed to measure the occurrence rate of an attribute. incontrast, tests of details of balances are designed to measure the amount of monetary misstatements in the population being sampled. what alternative courses of action are appropriate when a population is rejected using nonstatistical sampling for tests of details ofbalances? when should each option be followed? (select all that apply.)
1.adjust the account balance. when the auditor concludes that an account balance is materially misstated, the client may be willing to adjust the book value.
2.refuse to give an unmodified opinion. if the auditor believes the recorded amount in accounts receivable or any other account is not fairly stated, it is necessary to follow at least one of the above alternatives or to qualify the audit opinion in an appropriate manner.
3.increase the sample size. when the auditor increases the sample size, sampling risk is reduced ifthe rate of misstatements in the expanded sample, their dollar amount, and their direction are similar to those in the original sample. increasing the samplesize, therefore, may allow the auditorto conclude that the population is acceptable.
4.request the client to correct the population. in some cases the client's records are so inadequate that a correction of the entire population is required before the audit can be completed.
5.perform expanded audit tests in specific areas. if an analysis of the misstatements indicates that most of the misstatements are of a specific type, it may be desirable to restrict the additional auditeffort to the problem area.