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Chapter 13 - Audit Sampling

This chapter discusses audit sampling concepts and techniques. It covers the risks associated with sampling, including sampling risk, risk of incorrect acceptance, and risk of incorrect rejection. It distinguishes between tests of controls and substantive tests. The chapter describes how to perform audit sampling for both tests of controls and substantive tests using nonstatistical and statistical sampling methods. It focuses on probability proportional to size (PPS) sampling for substantive tests, outlining the steps to define the population, determine the sample size, select the sample, evaluate results, and document conclusions.

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256 views24 pages

Chapter 13 - Audit Sampling

This chapter discusses audit sampling concepts and techniques. It covers the risks associated with sampling, including sampling risk, risk of incorrect acceptance, and risk of incorrect rejection. It distinguishes between tests of controls and substantive tests. The chapter describes how to perform audit sampling for both tests of controls and substantive tests using nonstatistical and statistical sampling methods. It focuses on probability proportional to size (PPS) sampling for substantive tests, outlining the steps to define the population, determine the sample size, select the sample, evaluate results, and document conclusions.

Uploaded by

小菁
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Modern

Modern Auditing:
Auditing:

Assurance
Assurance Services
Services and
and the
the Integrity
Integrity
th
of
Financial
Reporting,
8
of Financial Reporting, 8th Edition
Edition
William C. Boynton

California Polytechnic State


University at San Luis Obispo

Raymond N. Johnson
Portland State University

Chapter 13 Audit Sampling

Chapter
Chapter Overview
Overview

Basic
Basic Audit
Audit Sampling
Sampling Concepts
Concepts
Nature and Purpose of Audit
Sampling

Use less than 100% of items


Apply to evaluate entire population

Uncertainty and Audit Sampling

Audit Risk
Control Risk and Test of Details Risk

Sampling
Sampling Risk
Risk
Sample v. Population
Tests of Controls

Risk of Assessing Control Risk too Low


Risk of Assessing Control Risk too High

Substantive Tests

Risk of Incorrect Acceptance


Risk of Incorrect Rejection

Sampling
Sampling Risks
Risks Tests
Tests of
of
Controls
Controls

Sampling
Sampling Risks
Risks Substantive
Substantive
Tests
Tests

Nonsampling
Nonsampling Risk
Risk
Human mistakes
Inappropriate application of audit
procedures
Misinterpretation of results of sample
Reliance upon erroneous information
from another party

Nonstatistical
Nonstatistical and
and Statistical
Statistical
Sampling
Sampling

Nonstatistical
Nonstatistical and
and Statistical
Statistical
Sampling
Sampling

Study
Study Break
Break
1. The risk that the sample will not
be representative of the
population is:
A.
B.
C.
D.

Inherent Risk
Audit Risk
Control Risk
Sampling Risk

D. Sampling Risk

Study
Study Break
Break
2. The risk that the sample supports the
conclusion that the recorded account
balance is not materially misstated when
it is materially misstated is:
A.
B.
C.
D.

Risk
Risk
Risk
Risk

of
of
of
of

assessing control risk too low


assessing control risk too high
incorrect acceptance
incorrect rejection

C. Risk of incorrect acceptance

Tests
Tests of
of Controls
Controls v.
v. Substantive
Substantive
Tests
Tests

Audit
Audit Sampling
Sampling for
for Tests
Tests of
of
Controls
Controls
Determine the Objectives of the
Tests of Controls
Determine the Procedures to
Evaluate Internal Controls
Make a Decision about the Audit
Sampling Technique

Audit
Audit Sampling
Sampling for
for Tests
Tests of
of
Controls
Controls
Define the Population and Sampling Unit
Use Professional Judgment to Determine
Sample Size

Nature of Control
Frequency of Operation
Importance of the Control
Risk of Assessing Control Risk too Low
Tolerable and Expected Deviation Rates
Population Size

Audit
Audit Sampling
Sampling for
for Tests
Tests of
of
Controls
Controls
Select a Representative Sample

Apply Audit Procedure

Evaluate the Sample Results

Document Conclusions

Study
Study Break
Break
3. The _____ represents the way the
auditor identifies the performance
of internal controls of interest.
A.
B.
C.
D.

Population
Sampling Unit
Materiality
Sampling Risk

B. Sampling Unit

Study
Study Break
Break
4. The _____ is the maximum rate of
deviation from a control that an
auditor is willing to accept and
still use the planned control risk.
A.
B.
C.
D.

Tolerable deviation rate


Maximum deviation rate
Maximum error rate
Inherent risk

A. Tolerable deviation rate

Audit
Audit Sampling
Sampling for
for Substantive
Substantive
Tests
Tests -- PPS
PPS
Determine the Objectives of the
Substantive Test

Estimating total amount of population


Estimating amount of misstatement

Determine the Substantive Audit


Procedures to Perform
Tests of Details of Transactions
Tests of Details of Balances

Audit
Audit Sampling
Sampling for
for Substantive
Substantive
Tests
Tests -- PPS
PPS
Make a Decision About the Audit
Sampling Technique
PPS v. Classical Variables Sampling

Define the Population and Sampling


Unit
Reciprocal Population
Logical Sampling Unit

Audit
Audit Sampling
Sampling for
for Substantive
Substantive
Tests
Tests -- PPS
PPS
Use Professional Judgment and
Statistical Methods to Determine
Sample Size

Book Value of Population Tested


Reliability Factor for Specified Risk of
Incorrect Acceptance
Tolerable Misstatement
Anticipated Misstatement and
Expansion Factor
Calculation of Sample Size

Audit
Audit Sampling
Sampling for
for Substantive
Substantive
Tests
Tests -- PPS
PPS
Select a Representative Sample
Sampling Risk
Calculate Sampling Interval
Select Random Sample

Apply Audit Procedures

Audit
Audit Sampling
Sampling for
for Substantive
Substantive
Tests
Tests -- PPS
PPS
Evaluate Sample Results

Upper Misstatement Limit


No Misstatements Found in the Sample
Some Misstatements Found in the
Sample
Qualitative Considerations

Document Conclusions

Study
Study Break
Break
5. This type of test can be used to
estimate the total dollar amount
of a population or the total dollar
amount of error in a population.
A.
B.
C.
D.

Test of Controls
Attribute Tests
Audit Tests
Substantive Tests

D. Substantive Tests

Study
Study Break
Break
6. In PPS, an item snagged in the
selection of the sample is know as
the ______.
A.
B.
C.
D.

Sampling Unit
Logical Sampling Unit
Population
Tolerable Misstatement

B. Logical Sampling Unit

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