Ingenuity in Auditing.

Abstract This article focuses on the issue of fairly stating financial statements. Since it would be both impractical and too costly to completely check the accuracy of all financial data, auditors rely on sampling techniques to obtain the information required in order to form an opinion regarding the fairness of financial statements. Sampling may be used to discover the nature of the data or it may be used to accept or reject data based on predetermined error limits. The auditors' initial concern was with their inexperience in scaling logs and with the expected difficulty in obtaining a log count. The scaling was solved by sampling and testing techniques, but the key to the solution of what appeared to the most difficult part of the assignment. This case has proved to be interesting to accounting students and also has been very effective in dispelling one of the common misconceptions regarding financial statements that they represent an enlarged version of counting the change in one's pockets. The case offers the teacher an opportunity to point out that financial statements are primarily management's responsibility and that independent auditors basically strive to satisfy themselves as to the reasonableness of the reported facts before rendering an opinion.