The individual items that make up the population are known as sampling units. II. Sample Selection Methods The principal methods of selecting samples are as follows: (a) Use of a computerized random number generator (through CAATs) or random number tables. (b) Systematic selection, in which Variable sampling A sampling technique used to estimate the average or total value of a population based on a sample; a statistical model used to project a quantitative characteristic, such as

Size of the firm’s transactions Produce high level of assurance in respect of completeness. Stratified random sampling—Ensures that all sampling units in each subgroup have a known, non-zero chance of selection. If for example the opposite comes true TR

This risk results from the fact that a particular audit sample may not be representative of the population. When using systematic selection, the auditor would need to determine that sampling units within the population are not structured in such a way that the sampling interval corresponds with a particular ANSWER: Sample size = ( See class notes) Sampling internal = (See class notes) The sample will be selected as follows: Ladger Value Cumulative Selected Balance Value Amount Shs. Moreover, there is automatic stratification of the sample by monetary value, since higher dollar values have a higher probability of being selected in the sample. 2.

Expected error Smaller expected errors, individually or in aggregate Larger expected errors, individually or in aggregate e. Clipping is a handy way to collect important slides you want to go back to later. Design of the sample 6. Before analysing the errors detected in the sample, auditors first would determine that an item in question is in fact an error.

For tests of control, precision is the Sako Mayrick, 2008 Page 5 6. Home My Story CPA Exam Forum Ask Jeff Refund Policy Call Us: 1-800-710-0928 | Visit Us @: NINJA MCQ NINJA Notes NINJA Audio Ten Point Combo Home CPA For a sample to be representative of the population, all items in the population are required to have an equal or known probability of being selected. 25. Sampling risk is frequently expressed as a %.

Main approaches to audit sampling are (i) Attribute sampling (numerical) – is a aimed at detecting what proportion of a population either has or lacks, a specific characteristic or attribute. . V. Etc. A confidence level is the degree of assurance that material error does not exist; it is the converse of risk.

nonsampling risk - uncertainities arising from factors unrelated to sampling. In determining the expected error in a population, auditors would consider such matters as error levels identified in previous audits, changes in the entity's procedures and evidence available from other procedures, Discovery sampling:- Called exploratory sampling is a secreening device for punching out populations which require further investigation”. Each dollar in the population has an equal chance of being selected, but the likelihood of selecting any one logical unit for testing is directly proportional to its size in dollars,

Anticipated error rate must be reasonably low. The only reason you need the expected rate is to determine your sample size (the more deviations you expect the greater the sample size needed). tolerable rate of deviation 3. b.

nonsampling risk - uncertainities arising from factors unrelated to sampling. Therefore, the auditor must use the sampling deviation rate in comparison with the tolerable rate. Audit sampling can use either a statistical or a non-statistical approach. 3. Population should be representative of all major transactions.

June 26, 2011 at 4:58 am #286617 watswidmeParticipant I just got the answer from another MCQ 🙂 Tolerable Rate = Allowance for sampling risk+Expected Deviation Rate Upper Deviation rate = Allowance The sampling unit is any of the individual elements constituting a population. Sako Mayrick, 2008 Page 11 12. Shs.

If auditors expect errors to be present in the population, a larger sample than when no error is expected ordinarily needs to be examined to conclude that the actual error in However, analysis of a haphazard sample should not be relied upon to form a conclusion on the population. b. If you continue browsing the site, you agree to the use of cookies on this website.

Determine sample size. 1. E.g. For those that are assessed as actual errors, the errors should be projected as appropriate to the population, but only if the sampling method used is statistically based.2.4.2 Any possible errors Sample design Sample design, which may be set out in a sample plan, includes consideration of: • Audit objective(s) of the test; • Population from which the sample is to be

Compliance with International Standards on Auditing 33. Audit Sampling Plan: Test of Controls 1. As a consequence, the financial statements could be materially misstated and therefore misleading. d.

Substituting this into attribute sampling formula we get. Stratification is the process of dividing a population into subpopulations with similar characteristics explicitly defined, so that each sampling unit can belong to only one stratum.2.2.7 When determining sample size, professionals For example, auditors may direct attention to larger value items for debtors to detect overstated material misstatements. If balances larger than the sampling internal are present, the size of the sample actually selected will be less than computed.

Samples should be drawn randomly to be representative of the population. Sampling units – Are individual items that make up the population. d. In addition, when audit sampling is appropriate, consideration should be given to the nature of the evidence sought, possible error conditions and possible root causes.2.2.2 When designing the audit sample, while

Every item in the population should stand an equal chance of selection. The next question is, what do you do with this information? The projection has two aspects (a) Estimating the probable error in the population (b) Adjusting the value of each error by a prevision by a prevision gap widening factor to arrive