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I I I I I I I I I I I I I I I I I I I VI~ PROPOSAL REQUIREMENTS B~PRQPOSAL 8. SPECIFIC AUDIT APPROACH (Continued) c. Sample size and the extent to which statistical sampling is to be used in the engagement Our professionals will utilize sampling methodologies designed to ensure effective audit procedures are applied in the most efficient manner. Samplinq Techniques We will utilize representative audit sampling procedures with respect to tests of transactions and tests of controls, where a sample of documentation is to be tested as the principal evidence of a control. During tests of controls, the tests will generally consist of a combination of corroborative inquiry and either observation, examination of documents or re-performance. We will use attribute sampling to test documentary evidence as documentation will be the prime corroborative evidence of identified controls. Statistical and Non-statistical Samplinq Tests of transactions and tests of controls can be performed using either statistically or non-statistically based techniques. Statistical approaches will be based on our calculation of risk factors. If a non-statistical approach is deemed appropriate, we will design our procedures to obtain levels of assurance that we judge to be equivalent to those required when using statistically based techniques. Sample Sizes For tests of controls, sample size will be based on the planned or supported assessed level of control risk and the number of planned or actual deviations expected. For transactions testwork, sample size will be a function of population, materiality, and risk factors. d. Extent of use of IMS software in the engagement We are actively committed to using computer-based audit techniques. Our knowledge of information systems (IS) and the use of personal computers yield significant savings in the time required to complete an audit. Today's marketplace provides firms, large and small, national and local, with sophisticated computer-aided audit tools necessary to perform data analysis and report generation. Software products, such as Audit Command Language (ACL) for Windows, are used to analyze data and produce reports. A client's IS environment influences the nature, timing, and extent of planned auditing procedures. Because most of our clients utilize computerized accounting systems, our professional team is experienced with various IS systems. As computers have become more integral to the financial management system, we have met the challenge by incorporating new audit techniques into the audit process. Staff members are trained on new software and are skilled in a wide variety of computerized applications. 'rr; ~r~'~if~d ~~~~~~>?,!~~ 37