Audit sampling
Area 3: Performing Further Procedures and Obtaining Evidence (30-40%)
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Topics
- Statistical and nonstatistical sampling
- Sample design and selection
- Evaluating sample results
Lessons
Study Frameworks
Tolerable Misstatement (sampling)
Performance Materiality allocated to account
Maximum misstatement in an account that can be accepted
Sample Size (attributes)
n = (Reliability Factor) / (Tolerable Rate − Expected Population Deviation Rate)
Tests of controls: larger samples needed when tolerable rate is low or expected deviations are high
MUS Sampling Interval
Sampling Interval = Total Population Value / Sample Size
Each nth dollar is a selection point. Larger balances have proportionally higher probability of selection.
MUS Projected Misstatement
Projected Misstatement = Tainting % × Sampling Interval, where Tainting % = (Book − Audit) / Book
Projects sample misstatements to the population. Items exceeding the interval use actual misstatement, not projection.
Sampling Approaches
| Approach | Use | Method |
|---|---|---|
| Attribute sampling | Tests of controls | Determine rate of control deviations |
| Variables sampling (MUS) | Substantive testing | Estimate monetary misstatement using monetary-unit sampling |
| Classical variables | Substantive testing | Mean-per-unit, difference, or ratio estimation |
| Non-statistical | Either | Auditor judgment for sample selection and evaluation |
The four types of sampling risk. ROIA helps remember the two dangerous effectiveness risks: overreliance on controls and incorrect acceptance of a misstated balance.