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SA 530: Audit Sampling, :memo: Sample Selection Methods: Random selection,…
SA 530: Audit Sampling
Audit Sampling
The application of AP to less than 100% of items within a population of audit relevance such that all sampling units have a chance of selection in order to provide the auditor with a reasonable assurance to draw conclusions about the entire population.
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Anomaly: A misstatement or deviation that is demonstrably not representative of deviations in a population
Non-sampling Risk: Risk that the auditor reaches an erroneous conclusion for any reason not related to sampling risk
Tolerable Misstatement: A monetary amount set by the auditor in respect of which the auditor seeks to obtain a level of assurance that the actual misstatement in population is less than amount set by the auditor
Tolerable Rate of Deviation: A rate of deviation from prescribed IC procedures set by the auditor in respect of which the auditor seeks to obtain an appropriate level of assurance that actual rate of deviation in population is less than the rate set by the auditor
Stratification: The process of dividing a population into sub-population, each of which is a group of sampling units which have similar characteristics
Statistical Sampling
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Non-statistical Sampling
A sampling approach that does not have characteristics of random selection and use of probability theory
Sample size and its composition are determined on the basis of personal experience and knowledge of the auditor
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Sampling Risk
The risk that the auditor's conclusion based on a sample may be different from the conclusion if the entire population were subject to the same AP.
TOC — Controls are more effective than they actually are
TOD — MM does not exist when in fact it does
Affects audit effectiveness and is more likely to lead to an inappropriate audit opinion
TOC — Controls are less effective than they actually are
TOD — MM exists when in fact it does not
Affects audit efficiency and is likely to lead to additional work to establish that initial conclusions were incorrect
1, Sample Design, Size, and Selection of Items for Testing
Sample Design: When designing an audit sample, consider purpose of AP and characteristic of pop. from which samples will be drawn
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Sampling Unit Selection: Select a sample in such a way that each sampling unit in the pop. has a chance of selection
2. Performing AP
Shall perform AP appropriate to the purpose, on each item selected
If AP is not applicable to selected items, perform procedure on replaced item
If auditor is unable to apply designed AP/alternate procedure to a selected item, consider that item as deviation
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:memo: Sample Selection Methods: Random selection, Systematic selection, Monetary unit sample, Haphazard selection, Block selection