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AUDIT SAMPLING (Planning the Sample (State the objectives of the audit…
AUDIT SAMPLING
Planning the Sample
- State the objectives of the audit test.
- Decide whether audit sampling applies
- Define attributes and exception conditions
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- Define the sampling unit.
- Specify the tolerable exception rate.
- Specify the acceptable risk of assessing control risk too low
- Estimate the population exception rate
- Determine the initial sample size.
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- Perform the audit procedures
- Generalize from the sample to population
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- Decide the acceptability of the population
What is Sampling
Audit sampling is the application of an audit procedure
(test of control or substantive testing) to less than
100% of the items within an account balance or class
of transactions for the purpose of drawing a general
conclusion about the account balance or the entire
group of transactions based on the characteristics
detected in the sample.
Non-Sampling Risk
Non-sampling risk is the risk
that the audit tests do not
uncover existing exceptions
in the sample. The two
causes are:
► Auditor failure to recognize
exceptions
► Inappropriate or ineffective
audit procedures
Sampling Risk
Sampling risk is the risk
that an auditor reaches
an incorrect conclusion
because the sample is
not representative of
the population. This
can be controlled by:
► Adjusting the sample size
► Using an appropriate
method of selecting
sample items
Statistical Sampling
Applies the laws of
probability theory to
assist the auditor in
designing a sampling
plan and subsequently
evaluating the results of
the sample.
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