CHAPTER 12 AUDIT SAMPLING TESTS OF CONTROL SAMPLING
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CHAPTER 12 AUDIT SAMPLING - TESTS OF CONTROL
SAMPLING TERMS • SAMPLING – APPLICATION OF AN AUDITING PROCEDURE TO LESS THAN 100 PERCENT OF A POPULATION • SAMPLING RISK – RISK THAT SAMPLE IS NOT REPRESENTATIVE OF THE POPULATION • NONSAMPLING RISK – ALL OTHER RISKS
STATISTICAL SAMPLING • STATISTICAL SAMPLING – USES LAWS OF PROBABILITY TO QUANTIFY AND CONTROL FOR SAMPLING RISK • PLAN SAMPLE • SELECT SAMPLE • EVALUATE RESULTS • NONSTATISTICAL SAMPLING – USES AUDITOR JUDGMENT TO ACCOMPLISH STEPS ABOVE
SELECTING SAMPLE ITEMS • NONPROBABILISTIC SAMPLE SELECTION – DIRECTED ITEM SELECTION • MOST LIKELY TO CONTAIN ERRORS • ITEMS CONTAINING CHARACTERISTICS • LARGE DOLLAR ITEMS – BLOCK SAMPLING – HAPHAZARD SELECTION
• PROBABILISTIC SAMPLING – SIMPLE (UNRESTRICTED) RANDOM SELECTION • EVERY POSSIBLE COMBINATION OF ITEMS IN POPULATION HAS AN EQUAL CHANCE OF BEING SELECTED – LOTTERY • RANDOM NUMBER TABLE • WITH OR WITHOUT REPLACEMENT – SYSTEMATIC SELECTION • INTERVAL SAMPLING WITH RANDOM START – POPULATION/SAMPLE SIZE = INTERVAL SIZE – RANDOM START WITHIN INTERVAL (RS) – SELECTED ITEMS = RS + INTERVALS
SAMPLING FOR EXCEPTION RATES • ATTRIBUTE SAMPLING – DEVIATIONS FROM CONTROL – DEVIATION RATE • SAMPLING RISK – RISK OF ASSESSING CONTROL RISK TOO LOW – RISK OF ASSESSING CONTROL ISK TOO HIGH
STATISTICAL SAMPLING • SAMPLING PLAN • • • OBJECTIVE OF TEST DECIDE IF SAMPLING APPLIES DEFINE ATTRIBUTES AND DEVIATIONS DEFINE POPULATION DEFINE SAMPLING UNIT DETERMINE TOLERABLE EXCEPTION RATE ACCEPTABLE RISK OF ASSESSING CR TOO LOW ESTIMATE POPULATION EXCEPTION RATE DETERMINE SAMPLE SIZE SELECT SAMPLE PERFORM AUDIT PROCEDURES
NONSTATISTICAL SAMPLING • SAMPLING PLAN • DETERMINE SAMPLE SIZE – – POPULATION SIZE TOLERABLE EXCEPTION RATE ACCEPTABLE RISK OF ASSESSING CR TOO LOW EXPECTED POPULATION EXCEPTION RATE • GENERALIZE TO POPULATION – SAMPLE EXCEPTION RATE – JUDGMENTAL ALLOWANCE FOR SAMPLING RISK • ANALYZE EXCEPTIONS
