Audit Sampling
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What is Audit Sampling?
Applying a procedure to less than
100% of a population
To estimate some characteristic of the population Qualitative
Quantitative
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Risk
Sampling risk
risk that the auditors’ conclusions based on a sample may be different from the conclusion they would reach if they examined every item in the population
Non-sampling risk risk pertaining to non-sampling errors
Can be reduced to low levels through effective planning and supervisions of audit engagements
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Non-statistical Sampling
The auditor estimates sampling risk by using professional judgment rather than statistical techniques
Provides no means of quantifying sampling risk
Sample may be larger than necessary or auditors may unknowingly accept a higher than acceptable degree of sampling risk
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Advantages of Statistical
Sampling
Allows auditors to measure and control sampling risk which helps:
Design efficient samples
Measure sufficiency of evidence
Objectively evaluate sample results
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Selection of Random Sample
Random sample results in a statistically unbiased sample that may not be a representative sample
Random sample techniques
Random number tables
Random number generators
Systematic selection
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Random Number Table Figure
9.1
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Other Methods of Sample Selection
Other methods
Haphazard selection
Select items on an arbitrary basis, but without
any conscious bias
Block selection
Block sample consists of all items in a selected
time period, numerical sequence or alphabetical sequence
Stratification
Technique of dividing population into relatively homogeneous subgroups
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An Illustration of
Stratification
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Types of Statistical Sampling Plans
Attributes sampling
Discovery sampling
Classical variables sampling
Mean-per-unit estimation
Ratio estimation
Difference estimation
Probability-proportional-to-size sampling
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Dual Purpose Test
Tested used both as a test of control and substantiating the dollar amount of an account balance
Ex. Test to evaluate the effectiveness of a control over recording sales transactions and to estimate the total overstatement or understatement of the sales account
Copyright © 2016 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
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Allowance for Sampling