Determining Sample Size The required sample size can

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Determining Sample Size § The required sample size can be found to reach a

Determining Sample Size § The required sample size can be found to reach a desired margin of error (e) with a specified level of confidence (1 - ) § The margin of error is also called sampling error § the amount of imprecision in the estimate of the population parameter § the amount added and subtracted to the point estimate to form the confidence interval Statistics for Managers Using Microsoft Excel, 5 e © 2008 Pearson Prentice-Hall, Inc. Chap 8 -1

Determining Sample Size § To determine the required sample size for the mean, you

Determining Sample Size § To determine the required sample size for the mean, you must know: § The desired level of confidence (1 - ), which determines the critical Z value § The acceptable sampling error (margin of error), e § The standard deviation, σ Now solve for n to get Statistics for Managers Using Microsoft Excel, 5 e © 2008 Pearson Prentice-Hall, Inc. Chap 8 -2

Determining Sample Size If = 45, what sample size is needed to estimate the

Determining Sample Size If = 45, what sample size is needed to estimate the mean within ± 5 with 90% confidence? So the required sample size is n = 220 Statistics for Managers Using Microsoft Excel, 5 e © 2008 Pearson Prentice-Hall, Inc. Chap 8 -3

Class Exercise Statistics for Managers Using Microsoft Excel, 5 e © 2008 Pearson Prentice-Hall,

Class Exercise Statistics for Managers Using Microsoft Excel, 5 e © 2008 Pearson Prentice-Hall, Inc. Chap 8 -4

Class Exercise Statistics for Managers Using Microsoft Excel, 5 e © 2008 Pearson Prentice-Hall,

Class Exercise Statistics for Managers Using Microsoft Excel, 5 e © 2008 Pearson Prentice-Hall, Inc. Chap 8 -5

Class Exercise Statistics for Managers Using Microsoft Excel, 5 e © 2008 Pearson Prentice-Hall,

Class Exercise Statistics for Managers Using Microsoft Excel, 5 e © 2008 Pearson Prentice-Hall, Inc. Chap 8 -6

Applications in Auditing § Six advantages of statistical sampling in auditing § Sample result

Applications in Auditing § Six advantages of statistical sampling in auditing § Sample result is objective and defensible § Based on demonstrable statistical principles § Provides sample size estimation in advance on an objective basis § Provides an estimate of the sampling error Statistics for Managers Using Microsoft Excel, 5 e © 2008 Pearson Prentice-Hall, Inc. Chap 8 -7

Applications in Auditing § Can provide more accurate conclusions on the population § Examination

Applications in Auditing § Can provide more accurate conclusions on the population § Examination of the population can be time consuming and subject to more nonsampling error § Samples can be combined and evaluated by different auditors § Samples are based on scientific approach § Samples can be treated as if they have been done by a single auditor § Objective evaluation of the results is possible § Based on known sampling error Statistics for Managers Using Microsoft Excel, 5 e © 2008 Pearson Prentice-Hall, Inc. Chap 8 -8

Sample Size Determination Determining Sample Size for ProbabilitySample Size Determination Determining Sample Size for Probability
Determining the Appropriate Sample Size SAMPLE SIZE REQUIREMENTDetermining the Appropriate Sample Size SAMPLE SIZE REQUIREMENT
5 6 Determining Sample Size to Estimate Required5 6 Determining Sample Size to Estimate Required
Determining the Size of a Sample Sample AccuracyDetermining the Size of a Sample Sample Accuracy
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Sample size Sample size calculations Outcome or exposureSample size Sample size calculations Outcome or exposure