| Course | AC503 Advanced Auditing |
|---|---|
| Unit | Unit 5 |
| Paper type | Audit sampling plan |
| Length | About 560 words, 5 pages double-spaced |
| Format | APA 7 student paper |
| School | Purdue University Global |
| Program | MS in Accounting |
| Updated | October 2026 |
Free sample paper for AC503 Unit 5
Sizing Before Selecting: A Unit 5 Monetary Unit Sampling Plan for $18.4 Million of Receivables
[Student Name]
Purdue University Global
AC503: Advanced Auditing
Unit 5 Sampling Plan
[Instructor Name]
[Date]
Polar Ridge Cold Logistics and every figure are composite; the confidence and expansion factors are the commonly published Poisson values; the standards and textbook cited are real.
Objective
To obtain evidence that trade receivables at December 31, 2026 exist and are accurately stated, through confirmation of selected customer balances with alternative procedures for nonresponses.
Why Monetary Unit Sampling
The risk in receivables here is overstatement: billing at unapproved rates, recorded but undelivered services or balances for customers who have left. Monetary unit sampling gives every dollar an equal chance of selection, which tilts selection toward the biggest customer balances, and it is efficient when few misstatements are expected. Its weakness, poor coverage of understated or zero balances, matters less because understatement of receivables is not the risk being tested. Credit balances are handled separately for the same reason (American Institute of Certified Public Accountants [AICPA], 2012).
Population
The aged trial balance lists 1,286 customer accounts. After removing customers with credit balances totaling $142,000, which will be reviewed separately for misclassified payments, the population is $18,420,000 of debit balances. The trial balance was footed and agreed to the general ledger, and a sample of aging buckets was recomputed, before any selection.
Sampling Unit
The individual dollar. A selected dollar identifies the customer balance that contains it, and that whole balance is confirmed.
Parameters
Tolerable misstatement is $480,000, equal to performance materiality, because no other procedure is expected to detect misstatement in this balance. Expected misstatement is $40,000, based on the predecessor's workpapers and on the four unapproved rate changes found in Unit 4. We accept a 10 percent chance of wrongly concluding the balance is fairly stated, a level justified by the cutoff testing and rate recomputations planned elsewhere in the file, which give additional evidence over the same assertions.
Sample Size
Using the audit guide's confidence factor of 2.31 for zero misstatements at 10 percent risk and its expansion factor of 1.5 (AICPA, 2019), the interval is the tolerable misstatement less the expected misstatement times the expansion factor, divided by the confidence factor: $480,000 less $60,000, or $420,000, divided by 2.31, which is $181,818. Rounding down to $180,000 for convenience gives a population of $18,420,000 divided by $180,000, or about 103 selections (Arens et al., 2020). Any customer balance of $180,000 or more will be selected with certainty; there are eleven such balances, totaling $4,960,000.
The interval comes from the risk and the misstatement the team can tolerate, not from a round number chosen for convenience, so every parameter in the formula is defended in the file before the first confirmation is mailed.
Selection
A random start between $1 and $180,000 will be drawn, and every 180,000th dollar thereafter will be selected through the cumulative balance list.
Evaluation Rule
Misstatements will be projected by tainting: each misstatement's percentage of its book value, times the interval, except for balances selected with certainty, which are added at their actual amount. An allowance for sampling risk will be added to the projected misstatement to give an upper limit. If the upper limit exceeds $480,000, the team will expand testing or ask management to investigate the full population.
References
American Institute of Certified Public Accountants. (2012). Audit sampling (AU-C Section 530). AICPA.
American Institute of Certified Public Accountants. (2019). Audit sampling: Audit guide. AICPA.
Arens, A. A., Elder, R. J., Beasley, M. S., & Hogan, C. E. (2020). Auditing and assurance services (17th ed.). Pearson.
The Purdue Global AC503 Unit 5 instructions
The fifth AC503 unit asks you to write a statistical sampling plan before testing begins. State the objective and the assertions tested. Explain why the chosen method suits the risk, including its weaknesses and how you will cover them. Define the population, show that it was footed and agreed to the ledger, and explain any items removed for separate testing. Define the sampling unit. Set tolerable misstatement, expected misstatement and the risk of incorrect acceptance, with a reason for each. Compute the sample size or interval by formula, showing the factors used, and identify items selected with certainty. Describe the selection method. Fix the evaluation rule, including how misstatements will be projected and what happens if the upper limit exceeds tolerable misstatement. Name the sampling standard, the audit guide and your textbook in an APA 7 reference list.
How this AC503 Unit 5 example is built
The sample states its objective, existence and accuracy of receivables at December 31, then explains why monetary unit sampling fits an overstatement risk and why credit balances are handled separately. The population of 1,286 accounts is footed and reduced to $18,420,000 of debit balances. Parameters follow, each with a reason, including expected misstatement drawn from the four unapproved rate changes. The sizing section applies the guide's 2.31 confidence factor and 1.5 expansion factor to reach $181,818, rounded down to $180,000, and identifies eleven certainty items totaling $4,960,000. The highlighted sentence explains why parameters come before selection. Systematic selection from a random start and a tainting-based evaluation rule close the plan.
Reading the AC503 Unit 5 grading rubric
Sampling plans in AC503 earn points for defended parameters and correct arithmetic. Graders check that the method matches the risk being tested and that its known weakness, here understatement, is acknowledged and covered elsewhere. The population must be complete and reconciled before sizing. Each parameter needs a reason tied to materiality, prior findings or other evidence. The rubric rewards showing the formula with its factors and identifying certainty items. An evaluation rule fixed in advance, with a projection method and a decision rule, shows the plan is genuinely prospective. Plans that state a sample size without derivation, or set parameters after seeing results, are graded down heavily. Reference the sampling standard and guide in APA 7.
Common AC503 Unit 5 mistakes, and how to avoid them
Common Unit 5 problems begin with an unreconciled population, so the sample represents an unknown total. Credit balances are left in, distorting a dollar-based selection. Parameters are stated without reasons, or expected misstatement is set at zero despite known problems. Students quote a sample size from a table without showing how the inputs produce it. Certainty items are not identified. The evaluation rule is left until results are in, which invites adjusting the conclusion to fit. Monetary unit sampling is used for completeness, where it performs poorly. If your section's balance or method differs, such as classical variables sampling for inventory, we can design the plan for that method instead for that method.
Get an AC503 Unit 5 example written to your instructions
Give the account or class your Unit 5 prompt names, the population figures and any risk settings it fixes, together with the rubric. The plan justifies method, population and every parameter, then computes size and states its evaluation rule, arriving within 24-48h. A first custom sample carries no fee, and a section preferring classical variables sampling gets the plan built that way. The paper above is an original model document written by our desk, not a submitted student paper and not an official Purdue University Global document.
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AC503 Unit 5 questions, answered
Why is monetary unit sampling not used for completeness?
Because it selects dollars that are recorded. An account left out of the listing, or understated, contributes few or no dollars and is unlikely to be chosen. The AC503 example states that limit in its method paragraph and points completeness to other procedures, such as searching subsequent billings and reconciling shipment records to invoices.
How is a misstatement projected in this kind of sample?
For an item smaller than the interval, the misstatement is expressed as a percentage of the item's recorded amount, its tainting, and multiplied by the interval. Items at or above the interval contribute their actual misstatement without projection. The example states this rule in advance and adds the incremental allowance for each projected misstatement, ranked by tainting.
Where can I find a free AC503 Unit 5 sample paper?
This page holds a full AC503 Unit 5 monetary unit sampling plan for $18,420,000 of receivables at Polar Ridge Cold Logistics with defended parameters, a formula-derived interval, certainty items and APA 7 references.
Why round the interval down from $181,818 to $180,000?
A smaller interval slightly increases the number of selections, which leaves a little more room between the upper misstatement limit and tolerable misstatement if errors are found. Rounding up would do the opposite.
How is a misstatement projected in this plan?
For a balance smaller than the interval, the misstatement is expressed as a percentage of the recorded amount, its tainting, and multiplied by the $180,000 interval. Balances selected with certainty add their actual misstatement without projection.