Reference no: EM13393704

Edwards has decided to use probability-proportional-to-size (PPS) sampling sometimes called dollar-unit sampling, in the audit of a client's accounts receivable balance. Few, if any errors of overstatement are expected.

Edwards plans to use the following PPS sampling table:

5% Reliability Factors For Overstatements

Number of Risk of incorrect Acceptance

Overstatements 1% 5% 10% 15% 20%

0 4.61 3.00 2.31 1.90 1.61

1 6.64 4.75 3.89 3.38 3.00

2 8.41 6.30 5.33 4.72 4.28

3 10.05 7.76 6.69 6.02 5.52

4 11.61 9.61 8.00 7.27 6.73

Required

a.) Identify the advantages of using PPS sampling over classical variables sampling.

Note : Requirements b) and c) are not related.

b.) Calculate the sampling interval and the sample size Ewards should use.