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Acc 014 - Audit Sampling
Acc 014 - Audit Sampling
CHAPTER 9
LEARNING OBJECTIVES
1. 100% examination
• examine the entire population
•Unlikely for test of controls
•When a population constitutes a small number of
large value items when there is a significant risk
WAYS OF SELECTING ITEMS TO TEST
3. Audit Sampling
• The application of audit procedures to less than
100% of the items within an account balance or
class of transactions that all sampling units have
a chance of selection
AUDIT SAMPLING IN RELATION TO AUDIT PROCEDURES
RISK
ASSESSMENT
PROCEDURES
TESTS OF CONTROL
- Normally does
- Generally
not make use of
appropriate when
audit sampling
application of control
leaves audit evidence
of performance
SUBSTANTIVE PROCEDURES
- Relate to test of details only
TERMINOLOGIES USED IN AUDIT SAMPLING
ERRORS
DEVIATION MISSTATEMENT
DETECTION RISK
ATTRIBUTE VARIABLE
SAMPLING SAMPLING
Tolerable
Deviation
Rate
ACCEPTABLE SAMPLING RISK
Chart Title Chart Title
Not chose
as
Not Sample,20
Chosen %
as
Sample,
Sample, 40%
Sample,80
60% %
ADVANTAGE
Gives each item in the population an equal
opportunity to be selected
Useful for statistical and non-statistical sampling
RANDOM NUMBER SELECTION
ADVANTAGE
Easy to use
Population items do not have to be pre-numbered in
order for the auditor to use this
Useful for statistical and non-statistical sampling
SYSTEMATIC SELECTION
Population name: Purchase Order
Population Size: 20
Sample Size needed: 10
Random Starting point: Item No. 3
2 = 20/10
DRAWBACKS
• Results excessively high sampling risk
• Testing large number of blocks is inefficient
What
if?
Voided Documents
• If it is properly voided, it
should be replaced by another
sample item
Missing documents
• Auditor was not able to
determine whether the control
was properly performed, such
item should be treated as
deviation
EVALUATION OF RESULTS
EVALUATION OF RESULTS
TEST OF CONTROLS
1. Determine
the sample
deviation
rate
DISCOVERY SAMPLING
• Most appropriate when no deviations are expected in the
population, thus even ONE deviation would cause concern
• When auditor suspects that an irregularity might have been
committed
SAMPLING FOR SUBSTANTIVE
TESTS
FACTORS IN DETERMINING THE SAMPLE SIZE
2. Tolerable misstatement
• Maximum amount of misstatement that the auditor
will permit in the population and still be willing to
conclude that the account balance is fairly stated
• Determined in the planning stage of audit
• Related to the auditor’s preliminary estimate of
materiality
3. Expected Misstatement
ADVANTAGES
• Decreases the effect of variance in the population
thus decreases sample size
• Allows the auditor to give more emphasis to those
items with higher monetary value
STRATIFIED SAMPLING
CPA
EVALUATION OF RESULTS
I. PROJECT THE MISSTATEMENTS TO THE POPULATION
Projected Misstatement
=EPAV- Population Book Value
DIFFERENCE ESTIMATION
• Used to measure the estimated total misstatement
amount in the population when there is both a
recorded value and an audited value for each item in
the sample
• Appropriate when the misstatement in an account is
not affected by the book value of the item being
examined
Estimated Population Audited Value
= Amount of misstatement x (Population Size / Sample size)
Projected Misstatement
=EPAV- Population Book Value
MEAN-PER-UNIT ESTIMATION
AV / population size
ILLUSTRATION
DIFFERENCE ESTIMATION
PM= P48,000 * (200/ 24)
PM= P400,000
II. COMPARE THE PM TOGETHER WITH THE TOLERABLE
MISSTATEMENTS AND DRAW AN OVERALL CONCLUSION