AUDIT SAMPLING CONCEPTS
-
Upload
fadlan-nasution -
Category
Documents
-
view
13 -
download
1
description
Transcript of AUDIT SAMPLING CONCEPTS
-
7/18/2019 AUDIT SAMPLING CONCEPTS
1/123
11 - 1Copyright 2003 Pearson Education Canada Inc.
CHAPTER 11
Audit Sampling
Concepts
-
7/18/2019 AUDIT SAMPLING CONCEPTS
2/123
11 - 2Copyright 2003 Pearson Education Canada Inc.
What is aWhat is a representativer
epresentativesample?sample?
-
7/18/2019 AUDIT SAMPLING CONCEPTS
3/123
11 - 3Copyright 2003 Pearson Education Canada Inc.
What is aWhat is a representativer
epresentativesample?sample?
A representative sample has the samecharacteristics as the population from
which the sample was taken.
-
7/18/2019 AUDIT SAMPLING CONCEPTS
4/123
11 - 4Copyright 2003 Pearson Education Canada Inc.
What can make a sampleWhat can make a sample nonnon--representative?representative?
-
7/18/2019 AUDIT SAMPLING CONCEPTS
5/123
11 - 5Copyright 2003 Pearson Education Canada Inc.
What can make a sampleWhat can make a sample nonnon--representative?representative?
- sampling errors
?
-
7/18/2019 AUDIT SAMPLING CONCEPTS
6/123
11 - 6Copyright 2003 Pearson Education Canada Inc.
What can make a sampleWhat can make a sample nonnon--representative?representative?
ampling errors
occur !ecause of the natureof sampling" the proper
sampling metho# was selecte#$
applie#$ an# interprete# !utfaile# to uncover materialmisstatements.
-
7/18/2019 AUDIT SAMPLING CONCEPTS
7/12311 - %Copyright 2003 Pearson Education Canada Inc.
What can an au#itor #o to re#uceWhat can an au#itor #o to re#ucethe risk ofthe risk of sampling errorssampling errors??
-
7/18/2019 AUDIT SAMPLING CONCEPTS
8/12311 - &Copyright 2003 Pearson Education Canada Inc.
What can an au#itor #o to re#uceWhat can an au#itor #o to re#ucethe risk ofthe risk of sampling errorssampling errors??
increase sample si'e
-
7/18/2019 AUDIT SAMPLING CONCEPTS
9/12311 - (Copyright 2003 Pearson Education Canada Inc.
What can make a sampleWhat can make a sample nonnon--representative?representative?
- sampling errors- nonsampling errors
?
-
7/18/2019 AUDIT SAMPLING CONCEPTS
10/12311 - 1)Copyright 2003 Pearson Education Canada Inc.
What can make a sampleWhat can make a sample nonnon--representative?representative?
- sampling errors- nonsampling errors result from au#itorfailure to recogni'e errors or e*cep-
tions or from the selection of ineffec- tive or inappropriate proce#ures
oops+
-
7/18/2019 AUDIT SAMPLING CONCEPTS
11/12311 - 11Copyright 2003 Pearson Education Canada Inc.
What can an au#itor #o to re#uceWhat can an au#itor #o to re#ucethe risk ofthe risk of nonsampling errorsnonsampling errors??
-
7/18/2019 AUDIT SAMPLING CONCEPTS
12/12311 - 12Copyright 2003 Pearson Education Canada Inc.
What can an au#itor #o to re#uceWhat can an au#itor #o to re#ucethe risk ofthe risk of nonsampling errorsnonsampling errors??
increase au#itor competence
Continuing Professional
Education
-
7/18/2019 AUDIT SAMPLING CONCEPTS
13/12311 - 13Copyright 2003 Pearson Education Canada Inc.
Au#it sampling can !e !ase# on,Au#it sampling can !e !ase# on,
statistics
/u#gment
-
7/18/2019 AUDIT SAMPLING CONCEPTS
14/12311 - 14Copyright 2003 Pearson Education Canada Inc.
nonstatistical sampling statistical sampling
-
7/18/2019 AUDIT SAMPLING CONCEPTS
15/12311 - 15Copyright 2003 Pearson Education Canada Inc.
primar0
a#vantage,the au#it
risk can !euantifie#
nonstatistical sampling statistical sampling
primar0
a#vantage,emplo0sau#itors
e*periencean#
/u#gment
-
7/18/2019 AUDIT SAMPLING CONCEPTS
16/12311 - 16Copyright 2003 Pearson Education Canada Inc.
nonstatistical sampling statistical sampling
primar0
a#vantage,thesampling
risk can !euantifie#
primar0
a#vantage,emplo0sau#itors
e*periencean#
/u#gment
-
7/18/2019 AUDIT SAMPLING CONCEPTS
17/12311 - 1%Copyright 2003 Pearson Education Canada Inc.
nonstatistical sampling statistical sampling
#etermine sample si'e
e*plicitl0 recogni'ing relevant factors
/u#gmentall0
#etermine sample si'eimplicitl0 recogni'ing relevant factors
-
7/18/2019 AUDIT SAMPLING CONCEPTS
18/12311 - 1&Copyright 2003 Pearson Education Canada Inc.
nonstatistical sampling statistical sampling
#etermine sample si'e
e*plicitl0 recogni'ing relevant factors
ran#oml0 select a
representative sample
/u#gmentall0
#etermine sample si'eimplicitl0 recogni'ing relevant factors
/u#gmentall0 select a
representative sample
-
7/18/2019 AUDIT SAMPLING CONCEPTS
19/12311 - 1(Copyright 2003 Pearson Education Canada Inc.
#etermine sample si'e
e*plicitl0 recogni'ing relevant factors
ran#oml0 select a
representative sample
appl0 au#it proce#ures
/u#gmentall0
#etermine sample si'eimplicitl0 recogni'ing relevant factors
/u#gmentall0 select a
representative sample
appl0 au#it proce#ures
nonstatistical sampling statistical sampling
-
7/18/2019 AUDIT SAMPLING CONCEPTS
20/12311 - 2)Copyright 2003 Pearson Education Canada Inc.
nonstatistical sampling statistical sampling
#etermine sample si'e
e*plicitl0 recogni'ing relevant factors
ran#oml0 select a
representative sample
appl0 au#it proce#ures
evaluate test results statisticall0 an# /u#gmentall0
/u#gmentall0
#etermine sample si'eimplicitl0 recogni'ing relevant factors
/u#gmentall0 select a
representative sample
appl0 au#it proce#ures
evaluate test results /u#gmentall0
-
7/18/2019 AUDIT SAMPLING CONCEPTS
21/12311 - 21Copyright 2003 Pearson Education Canada Inc.
nonstatistical sampling/u#gmentall0 select arepresentative sample
sample selection
onstatistical sampling emplo0snonpro!a!ilistic selection -the au#itor #eci#es which
population items to select.
-
7/18/2019 AUDIT SAMPLING CONCEPTS
22/12311 - 22Copyright 2003 Pearson Education Canada Inc.
nonpro!a!ilistic selection metho#s- /u#gmental #irecte# sample selection au#itor selects items !ase# on charac- teristics !ecause ran#om selection#oes not consi#er,
each t0pe of transaction
sample selectionnonstatistical sampling
/u#gmentall0 select arepresentative sample
-
7/18/2019 AUDIT SAMPLING CONCEPTS
23/123
11 - 23Copyright 2003 Pearson Education Canada Inc.
nonpro!a!ilistic selection metho#s- /u#gmental #irecte# sample selection au#itor selects items !ase# on charac- teristics !ecause ran#om selection#oes not consi#er,
each t0pe of transaction each preparer of transactions
sample selectionnonstatistical sampling
/u#gmentall0 select arepresentative sample
-
7/18/2019 AUDIT SAMPLING CONCEPTS
24/123
11 - 24Copyright 2003 Pearson Education Canada Inc.
nonpro!a!ilistic selection metho#s- /u#gmental #irecte# sample selection au#itor selects items !ase# on charac- teristics !ecause ran#om selection#oes not consi#er,
each t0pe of transaction each preparer of transactions large #ollar !alances
sample selectionnonstatistical sampling
/u#gmentall0 select arepresentative sample
-
7/18/2019 AUDIT SAMPLING CONCEPTS
25/123
11 - 25Copyright 2003 Pearson Education Canada Inc.
sample selection
nonpro!a!ilistic selection metho#s- !lock sampling - selection of a
seuence an# e*amining ever0 item inthe seuence
7*ample, e*amine all cancelle#
che ues of 8e!ruar
Ace 9orporation 324
:pa0 to the or#er of
#ate
nonstatistical sampling/u#gmentall0 select arepresentative sample
ANADIAN BANK
-
7/18/2019 AUDIT SAMPLING CONCEPTS
26/123
11 - 26Copyright 2003 Pearson Education Canada Inc.
nonpro!a!ilistic selection metho#s
- hapha'ar# selection - au#itor selects
items without regar# to characteristics
sample selection
;ewareof !ias+
nonstatistical sampling/u#gmentall0 select arepresentative sample
-
7/18/2019 AUDIT SAMPLING CONCEPTS
27/123
11 - 2%Copyright 2003 Pearson Education Canada Inc.
statistical sampling ran#oml0 select arepresentative sample sample selection
tatistical sampling emplo0s
pro!a!ilistic selection - ever0population item has a known
chance of !eing selecte#.
t ti ti l li
-
7/18/2019 AUDIT SAMPLING CONCEPTS
28/123
11 - 2&Copyright 2003 Pearson Education Canada Inc.
statistical sampling ran#oml0 select arepresentative sample
sample selection
pro!a!ilistic selection metho#s
- simple ran#om sample selection
use# to
sample populationsthat are not segmente#
for au#it purposes
t ti ti l li
-
7/18/2019 AUDIT SAMPLING CONCEPTS
29/123
11 - 2(Copyright 2003 Pearson Education Canada Inc.
statistical sampling ran#oml0 select arepresentative sample
sample selection
pro!a!ilistic selection metho#s- ran#om num!er ta!les
-
7/18/2019 AUDIT SAMPLING CONCEPTS
30/123
11 - 3)Copyright 2003 Pearson Education Canada Inc.
statistical sampling ran#oml0 select arepresentative sample
sample selection
pro!a!ilistic selection metho#s- use of ran#om num!er ta!le 1. num!er each population item 2. esta!lish correspon#ence !etween ta!le an# population 3. esta!lish a route in the ta!le 4. select a ran#om starting point
5. #ocument the metho#
t ti ti l li
-
7/18/2019 AUDIT SAMPLING CONCEPTS
31/123
11 - 31Copyright 2003 Pearson Education Canada Inc.
statistical sampling ran#oml0 select arepresentative sample
sample selection
pro!a!ilistic selection metho#s
- computer generation of ran#om num!ers
t ti ti l li
-
7/18/2019 AUDIT SAMPLING CONCEPTS
32/123
11 - 32Copyright 2003 Pearson Education Canada Inc.
statistical sampling ran#oml0 select arepresentative sample
sample selection
pro!a!ilistic selection metho#s- s0stematic selection - the au#itor cal-
culates an interval$ starts at ran#om$ an# selects ever0 nth item.
;eware of possi!le !ias with numeric tests$e.g.$ ever0 314th cheue is written on a 8ri#a0.
t ti ti l li
-
7/18/2019 AUDIT SAMPLING CONCEPTS
33/123
11 - 33Copyright 2003 Pearson Education Canada Inc.
statistical sampling ran#oml0 select arepresentative sample
sample selection
pro!a!ilistic selection metho#s- pro!a!ilit0 proportional to si'e an#
stratifie# sample selection
#iscusse# inchapter 14
-
7/18/2019 AUDIT SAMPLING CONCEPTS
34/123
11 - 34Copyright 2003 Pearson Education Canada Inc.
Au#it amplingAu#it ampling
?
-
7/18/2019 AUDIT SAMPLING CONCEPTS
35/123
11 - 35Copyright 2003 Pearson Education Canada Inc.
Au#itsampling is a
metho# use#to #etermine the
proportion of
population itemscontaining aparticular attri!ute.
Au#it amplingAu#it ampling
-
7/18/2019 AUDIT SAMPLING CONCEPTS
36/123
11 - 36Copyright 2003 Pearson Education Canada Inc.
When is au#it samplingWhen is au#it sampling
appropriate?appropriate?
-
7/18/2019 AUDIT SAMPLING CONCEPTS
37/123
11 - 3%Copyright 2003 Pearson Education Canada Inc.
When is au#itWhen is au#itsamplingsampling
appropriate?appropriate?
7*ample,cre#it
authori'ationof sales
A=7 >>97 3&52% @ate,
Ace 9ompan0 9ustomer,&34 e0nol#s #.Winnipeg$ ; 2 473ales epresentative,Buantit0 @escription Crice
total invoice amount
Derms of sale inclu#ing #iscounts an# freight costs,
9arrier,9re#it authori'ation,
tests ofcontrols
A
#i li D
-
7/18/2019 AUDIT SAMPLING CONCEPTS
38/123
11 - 3&Copyright 2003 Pearson Education Canada Inc.
Au#it ampling DermsAu#it ampling Derms
- attri!ute - the teste# characteristic
-
7/18/2019 AUDIT SAMPLING CONCEPTS
39/123
11 - 3(Copyright 2003 Pearson Education Canada Inc.
- attri!ute- accepta!le risk of assessing control risk too low AA9- the risk that the au#itor is willing to accept that con- trols are accepte# as effective$ !ut the actual population e*ception rate is greater than the D7
Au#it ampling DermsAu#it ampling Derms
A #it
li D
-
7/18/2019 AUDIT SAMPLING CONCEPTS
40/123
11 - 4)Copyright 2003 Pearson Education Canada Inc.
- attri!ute- accepta!le risk of assessing control risk too low AA9
- tolera!le e*ception rate D7 - the population e*ception rate the au#itor will permit an# still !e willing to use the
assesse# control risk an#Eor the amount of monetar0 misstatements inthe transactions esta!lishe# #uring
planning
Au#it ampling DermsAu#it ampling Derms
A #i li DA #it
li D
-
7/18/2019 AUDIT SAMPLING CONCEPTS
41/123
11 - 41Copyright 2003 Pearson Education Canada Inc.
- attri!ute- accepta!le risk of assessing control risk too low AA9- tolera!le e*ception rate D7- estimate# population e*ception rate7C7 - the e*ception rate that theau#itor e*pects to fin# this estimate is
ma#e prior to an0 testing
Au#it ampling DermsAu#it ampling Derms
A #it li DA #it
li D
-
7/18/2019 AUDIT SAMPLING CONCEPTS
42/123
11 - 42Copyright 2003 Pearson Education Canada Inc.
- attri!ute- accepta!le risk of assessing control risk too low AA9- tolera!le e*ception rate D7- estimate# population e*ception rate7C7
- initial sample si'e - #etermine# /u#g- mentall0 !0 the au#itor implicitl0 con- si#ering the AA9$ D7$ 7C7$ an#
population si'e
Au#it ampling DermsAu#it ampling Derms
A #it li DA #it
li D
-
7/18/2019 AUDIT SAMPLING CONCEPTS
43/123
11 - 43Copyright 2003 Pearson Education Canada Inc.
- attri!ute- accepta!le risk of assessing control risk too low AA9
- tolera!le e*ception rate D7- estimate# population e*ception rate7C7
- initial sample si'e- e*ception - a #eviation from the teste# characteristic
Au#it ampling DermsAu#it ampling Derms
A #it li DA #it
li D
-
7/18/2019 AUDIT SAMPLING CONCEPTS
44/123
11 - 44Copyright 2003 Pearson Education Canada Inc.
- attri!ute
- accepta!le risk of assessing control risk too low AA9- tolera!le e*ception rate D7
- estimate# population e*ception rate7C7
- initial sample si'e
- e*ception- sample e*ception rate 7,
num!er of e*ceptions
sample si'e
Au#it ampling DermsAu#it ampling Derms
A #it li DA #it
li D
-
7/18/2019 AUDIT SAMPLING CONCEPTS
45/123
11 - 45Copyright 2003 Pearson Education Canada Inc.
- attri!ute- accepta!le risk of assessing control risk too low AA9- tolera!le e*ception rate D7
- estimate# population e*ception rate 7C7- initial sample si'e- e*ception
- sample e*ception rate 7- compute# upper e*ception rate 9F7 - consi#ering the e*tent of e*ceptions$ the
worst likel0 population e*ception rate
Au#it ampling DermsAu#it ampling Derms
A #it li A
#it li
-
7/18/2019 AUDIT SAMPLING CONCEPTS
46/123
11 - 46Copyright 2003 Pearson Education Canada Inc.
Au#it ampling euenceAu#it ampling euence
?
A #it li A #it
li
-
7/18/2019 AUDIT SAMPLING CONCEPTS
47/123
11 - 4%Copyright 2003 Pearson Education Canada Inc.
A=7 >>97 3&52% @ate,Acme 9ompan0 9ustomer,
&34 e0nol#a #.Winnipeg$ ; 2 473ales epresentative,Buantit0 @escription Crice
total invoice amount
7st. shipment #ate,
Derms of sale inclu#ing #iscounts an# freight costs,9arrier,
9re#it authori'ation,
1. tate the o!/ectives of the au#it test.
7*ample, Dhe au#itor is testing propercre#it approval of sales.
Au#it ampling euenceAu#it ampling euence
Au#it ampling euenceA
u#it ampling euence
-
7/18/2019 AUDIT SAMPLING CONCEPTS
48/123
11 - 4&Copyright 2003 Pearson Education Canada Inc.
2. @eci#e if au#it sampling applies.
0es no
au#it
samplingisappropriate
au#itsampling
is notappropriate
@oes the au#itor
plan to reachconclusions !ase#
on a sample?
Au#it ampling euenceAu#it ampling euence
A #it li A #it
li
-
7/18/2019 AUDIT SAMPLING CONCEPTS
49/123
11 - 4(Copyright 2003 Pearson Education Canada Inc.
3. @efine attri!utes an# e*ceptioncon#itions.
>n thee*ample$ what is
the attri!ute?
Au#it ampling euenceAu#it ampling euence
A #it li A #it
li
-
7/18/2019 AUDIT SAMPLING CONCEPTS
50/123
11 - 5)Copyright 2003 Pearson Education Canada Inc.
A=7 >>97 3&52% @ate,
Acme 9ompan0 9ustomer,&34 e0nol#a #.Winnipeg$ ; 2 473ales epresentative,Buantit0 @escription Crice
total invoice amount
7st. shipment #ate,
Derms of sale inclu#ing #iscounts an# freight
costs,
9arrier,
9re#it authori'ation,
Joe Credit
the
signatureof thecre#it
manageron thesales
invoice
>n the
e*ample$ what isthe attri!ute?
3. @efine attri!utes an# e*ceptioncon#itions.
Au#it ampling euenceAu#it ampling euence
A #it li A #it am
pling e ence
-
7/18/2019 AUDIT SAMPLING CONCEPTS
51/123
11 - 51Copyright 2003 Pearson Education Canada Inc.
3. @efine attri!utes an# e*ceptioncon#itions.
>n thee*ample$ what is
the e*ceptioncon#ition?
Au#it ampling euenceAu#it ampling euence
A #it li Au#it am
pling euence
-
7/18/2019 AUDIT SAMPLING CONCEPTS
52/123
11 - 52Copyright 2003 Pearson Education Canada Inc.
A=7 >>97 3&52% @ate,
Acme 9ompan0 9ustomer,&34 e0nol#a #.Winnipeg$ ; 2 473ales epresentative,Buantit0 @escription Crice
total invoice amount
7st. shipment #ate,Derms of sale inclu#ing #iscounts an# freight costs,
9arrier,
9re#it authori'ation,
forge# signatureof cre#it manag-er$ no signature$
signature ofsomeone else
Jill Accountant
>n thee*ample$ what is
the e*ceptioncon#ition?
3. @efine attri!utes an# e*ception
con#itions.
Au#it ampling euenceAu#it ampling euence
#it liau#it sa
mpling seuence
-
7/18/2019 AUDIT SAMPLING CONCEPTS
53/123
11 - 53Copyright 2003 Pearson Education Canada Inc.
4. @efine the population.
>n thee*ample$ what is the
population?
au#it sampling seuenceau#it sampling seuence
A #it ampling e enceAu#it am
pling euence
-
7/18/2019 AUDIT SAMPLING CONCEPTS
54/123
11 - 54Copyright 2003 Pearson Education Canada Inc.
4. @efine the population.
2))4 sales invoicesseuence 1)3(% - 4)465Copulation si'e G 3)$)6&.
>n the
e*ample$ what is thepopulation?
Au#it ampling euenceAu#it ampling euence
Au#it ampling euenceAu#it am
pling euence
-
7/18/2019 AUDIT SAMPLING CONCEPTS
55/123
11 - 55Copyright 2003 Pearson Education Canada Inc.
5. @efine the sampling unit.
>n thee*ample$ what is the
sampling unit?
Au#it ampling euenceAu#it ampling euence
Au#it ampling euenceAu#it am
pling euence
-
7/18/2019 AUDIT SAMPLING CONCEPTS
56/123
11 - 56Copyright 2003 Pearson Education Canada Inc.
5. @efine the sampling unit.
onesales invoice
>n thee*ample$ what is the
sampling unit?
Au#it ampling euenceAu#it ampling euence
Au#it ampling euenceAu#it am
pling euence
-
7/18/2019 AUDIT SAMPLING CONCEPTS
57/123
11 - 5%Copyright 2003 Pearson Education Canada Inc.
6. pecif0 the tolera!le e*ception rate.
Dhis #etermination is !ase# on,- au#itor /u#gment- materialit0
- importance of the attri!ute
Au#it ampling euenceAu#it ampling euence
Au#it ampling euenceAu#it am
pling euence
-
7/18/2019 AUDIT SAMPLING CONCEPTS
58/123
11 - 5&Copyright 2003 Pearson Education Canada Inc.
>n the e*ample$ the au#itor nee#s to ask,
concerning the in#ication of cre#it ap-proval on sales invoices$ what percent of
invoices without appropriate approval
woul# prevent au#itor use of the assesse#control risk an#Eor the amount of monetar0misstatement in the transactions
esta!lishe# #uring planning.
6. pecif0 the tolera!le e*ception rate.
Au#it ampling euenceAu#it ampling euence
Au#it ampling euenceAu#it am
pling euence
-
7/18/2019 AUDIT SAMPLING CONCEPTS
59/123
11 - 5(Copyright 2003 Pearson Education Canada Inc.
6. pecif0 the tolera!le e*ception rate.
Au#it ampling euenceAu#it ampling euence
>n the e*ample$ the au#itors /u#gmentall0
assess the tolera!le e*ception rateD7,
D7 G %H
Au#it ampling euenceAu#it am
pling euence
-
7/18/2019 AUDIT SAMPLING CONCEPTS
60/123
11 - 6)Copyright 2003 Pearson Education Canada Inc.
When woul# the au#itorWhen woul# the au#itoresta!lish aesta!lish a lowlowD7?D7?
Au#it ampling euenceAu#it ampling euence
6. pecif0 the tolera!le e*ception rate.
Au#it ampling euenceA
u#it ampling euence
-
7/18/2019 AUDIT SAMPLING CONCEPTS
61/123
11 - 61Copyright 2003 Pearson Education Canada Inc.
When woul# the au#itorWhen woul# the au#itoresta!lish aesta!lish a lowlowD7?D7?
when the au#itoris less willing to accept e*cep-
tions e.g.$ cash controls
Au#it ampling euenceAu#it ampling euence
6. pecif0 the tolera!le e*ception rate.
Au#it ampling euenceAu#it am
pling euence
-
7/18/2019 AUDIT SAMPLING CONCEPTS
62/123
11 - 62Copyright 2003 Pearson Education Canada Inc.
%. pecif0 the accepta!le risk of assess- ing control risk too low AA9.
Do what #egree
#oes the au#itor wantto rel0 on controls?
Au#it ampling euenceAu#it ampling euence
Au#it ampling euenceAu#it am
pling euence
-
7/18/2019 AUDIT SAMPLING CONCEPTS
63/123
11 - 63Copyright 2003 Pearson Education Canada Inc.
low reliance on controls G high AA9high reliance on controls G low AA9
Do what #egree#oes the au#itor wantto rel0 on controls?
Au#it ampling euenceAu#it ampling euence
%. pecif0 the accepta!le risk of assess- ing control risk too low AA9.
Au#it ampling euenceAu#it am
pling euence
-
7/18/2019 AUDIT SAMPLING CONCEPTS
64/123
11 - 64Copyright 2003 Pearson Education Canada Inc.
Do what #egree
#oes the au#itor wantto rel0 on controls?
>n the e*ample$ the au#itors /u#gmentall0
assess the accepta!le risk of assessing con-trol risk too low,
AA9 G me#ium
Au#it ampling euenceAu#it ampling euence%. pecif0 the accepta!le risk of assess-
ing control risk too low AA9.
Au#it ampling euenceAu#it am
pling euence
-
7/18/2019 AUDIT SAMPLING CONCEPTS
65/123
11 - 65Copyright 2003 Pearson Education Canada Inc.
&. 7stimate the population e*ception rate 7C7 - estimate !ase# on prior 0ear 0ear au#it or small preliminar0 sample
8or thee*ample, 7C7 G 4H
Au#it ampling euenceAu#it ampling euence
Au#it ampling euenceAu#it am
pling euence
-
7/18/2019 AUDIT SAMPLING CONCEPTS
66/123
11 - 66Copyright 2003 Pearson Education Canada Inc.
(. @etermine the initial sample si'e .
consi#ere#initial !ecausethe au#itor ma0
later #eci#e tosample more
Au#it ampling euenceAu#it ampling euence
Au#it ampling euenceAu#it am
pling euence
-
7/18/2019 AUDIT SAMPLING CONCEPTS
67/123
11 - 6%Copyright 2003 Pearson Education Canada Inc.
(. @etermine the initial sample si'e .
@etermine# /u#gmentall0!ase# on
= 30,068
= 7%
= 10%
= 4%
pop.D7
AA97C7
Au#it ampling euenceAu#it ampling euence
l i @ t i ti
ample i e @etermination
-
7/18/2019 AUDIT SAMPLING CONCEPTS
68/123
11 - 6&Copyright 2003 Pearson Education Canada Inc.
ample i'e @eterminationample i'e @etermination
7=AD>C8A9D D AC=7 >I7AA9 inverseD7 inverse7C7 #irect
Cop. si'e no effect if pop.J 5$)))
Au#it ampling euenceA
u#it ampling euence
-
7/18/2019 AUDIT SAMPLING CONCEPTS
69/123
11 - 6(Copyright 2003 Pearson Education Canada Inc.
(. @etermine the initial sample si'e .
sample si'e G 15)
= 30,068
= 7%
= medium
= 4%
pop.D7AA9
7C7
Au#it ampling euenceAu#it ampling euence
@etermine# /u#gmentall0!ase# on
Au#it ampling euenceAu#it am
pling euence
-
7/18/2019 AUDIT SAMPLING CONCEPTS
70/123
11 - %)Copyright 2003 Pearson Education Canada Inc.
A=7 >>97 3&52% @ate,
Acme 9ompan0 9ustomer,&34 e0nol#a #.Winston-alem$ 92%1)(ales epresentative,Buantit0 @escription Crice
total invoice amount
7st. shipment #ate,9arrier,
9re#it authori'ation, Joe Credit
1). elect the sample.
11. Cerform the au#it proce#ures.
how?
Au#it ampling euenceAu#it ampling euence
-
7/18/2019 AUDIT SAMPLING CONCEPTS
71/123
11 - %1Copyright 2003 Pearson Education Canada Inc.
A=7 >>97 3&52% @ate,
Acme 9ompan0 9ustomer,&34 e0nol#a #.Winston-alem$ 92%1)(ales epresentative,Buantit0 @escription Crice
total invoice amount
9arrier,
9re#it authori'ation,Joe Credit
1). elect the sample.11. Cerform the au#it proce#ures.
f 15)invoicese*amine#$ %
ha# nocre#itapproval.
Au#it ampling euenceAu#it ampling euence
Au#it ampling euenceAu#it am
pling euence
-
7/18/2019 AUDIT SAMPLING CONCEPTS
72/123
11 - %2Copyright 2003 Pearson Education Canada Inc.
12. Kenerali'e from the sample to the
population.= 30,068
= 7%
= medium
= 4%
= 150
= 7
pop.D7
AA97C7e*ceptions
Au#it ampling euenceAu#it ampling euence
9onsi#ering these factors$/u#gmentall0 #etermine 9F7
Au#it ampling euenceAu#it am
pling euence
-
7/18/2019 AUDIT SAMPLING CONCEPTS
73/123
11 - %3Copyright 2003 Pearson Education Canada Inc.
12. Kenerali'e from the sample to the
population.= 30,068
= 7%
= medium
= 4%
= 150
= 7
pop.D7
AA97C7e*ceptions
Au#it ampling euenceAu#it ampling euence
9onsi#ering these factors$/u#gmentall0 #etermine 9F7
9F7
G &H
Au#it ampling euenceAu#it am
pling euence
-
7/18/2019 AUDIT SAMPLING CONCEPTS
74/123
11 - %4Copyright 2003 Pearson Education Canada Inc.
What #oesthis mean?
Au#it ampling euenceAu#it ampling euence
9F7
G &H
12. Kenerali'e from the sample to the
population.
Au#it ampling euenceAu#it am
pling euence
-
7/18/2019 AUDIT SAMPLING CONCEPTS
75/123
11 - %5Copyright 2003 Pearson Education Canada Inc.
Dhere is a me#iumrisk AA9 that the
true e*ception rate J &H
Au#it ampling euenceAu#it ampling euence12. Kenerali'e from the sample to the
population.
9F7
G &H
Au#it ampling euenceAu#it am
pling euence
-
7/18/2019 AUDIT SAMPLING CONCEPTS
76/123
11 - %6Copyright 2003 Pearson Education Canada Inc.
13. Anal0'e the e*ceptions. >s there a /ustifia!le reason?
>n the e*ample$ the au#itors foun# % sales in-voices without cre#it approval. 9oul# the0 !e
sales to internal #epartments or su!si#iaries?
Au#it ampling euenceAu#it ampling euence
Au#it ampling euenceAu#it am
pling euence
-
7/18/2019 AUDIT SAMPLING CONCEPTS
77/123
11 - %%Copyright 2003 Pearson Education Canada Inc.
14. @eci#e on the accepta!ilit0 of the population.
@ecision rule@ecision rule,,8or population accepta!ilit0,
9F79F7 LLD7D7
Au#it ampling euenceAu#it ampling euence
@ecision rule@ecision rule,,
-
7/18/2019 AUDIT SAMPLING CONCEPTS
78/123
11 - %&Copyright 2003 Pearson Education Canada Inc.
&H L %H
@ecision rule@ecision rule,,8or population accepta!ilit0,
9F79F7 LLD7D7
Dhe population isnot accepta!le" the controls regar#ing the
in#ication of cre#it approval on salesinvoices are not satisfactor0.
-
7/18/2019 AUDIT SAMPLING CONCEPTS
79/123
11 - %(Copyright 2003 Pearson Education Canada Inc.
When an internal control isWhen an internal control is
/u#ge# unaccepta!le$ what/u#ge# unaccepta!le$ whatoptions #oes the au#itor have?options #oes the au#itor have?
When an internal control isWhen an internal control is
-
7/18/2019 AUDIT SAMPLING CONCEPTS
80/123
11 - &)Copyright 2003 Pearson Education Canada Inc.
- revise the D7 an#Eor
AA9Dhis ma0 !e
consi#ere# ethicall0 uestiona!le.W
-
7/18/2019 AUDIT SAMPLING CONCEPTS
81/123
11 - &1Copyright 2003 Pearson Education Canada Inc.
- e*pan# the sample si'e
When is thisappropriate?
When an internal control isWhen an internal control is/u#ge# unaccepta!le$ what/u#ge# unaccepta!le$ what
options #oes the au#itor have?options #oes the au#itor have?
When an internal control isWhen an internal control is
-
7/18/2019 AUDIT SAMPLING CONCEPTS
82/123
11 - &2Copyright 2003 Pearson Education Canada Inc.
Dhis is onl0 appropriateif the au#itor !elieves thatthe sample was not repre-
sentative of the population.
When an internal control isWhen an internal control is/u#ge# unaccepta!le$ what/u#ge# unaccepta!le$ what
options #oes the au#itor have?options #oes the au#itor have?
- e*pan# the sample si'e
When an internal control isWhen an internal control is
-
7/18/2019 AUDIT SAMPLING CONCEPTS
83/123
11 - &3Copyright 2003 Pearson Education Canada Inc.
- revise the assesse# control risk up-
war#$ an# increase tests of #etails of!alances for relate# accounts aEr$ sales$ !a# #e!t e*pense$ allowance for
#ou!tful accounts
When an internal control isWhen an internal control is/u#ge# unaccepta!le$ what/u#ge# unaccepta!le$ what
options #oes the au#itor have?options #oes the au#itor have?
-
7/18/2019 AUDIT SAMPLING CONCEPTS
84/123
11 - &4Copyright 2003 Pearson Education Canada Inc.
When an internal control isWhen an internal control is/u#ge# unaccepta!le$ the/u#ge# unaccepta!le$ theau#itor isau#itor is reuire#reuire#toto
communicate this weaknesscommunicate this weaknessto management$ an# ma0to management$ an# ma0
inform the au#it committee asinform the au#it committee aswell.well.
Au#it ampling euenceAu#it a
mpling euence
-
7/18/2019 AUDIT SAMPLING CONCEPTS
85/123
11 - &5Copyright 2003 Pearson Education Canada Inc.
Au#it ampling euencep g
1. tate the o!/ectives of the au#it test.
Au#it ampling euenceAu#it a
mpling euence
-
7/18/2019 AUDIT SAMPLING CONCEPTS
86/123
11 - &6Copyright 2003 Pearson Education Canada Inc.
1. tate the o!/ectives of the au#it test.
7*ample, Dhe au#itor wants to #eter-mine the accepta!ilit0 of the notes re-ceiva!le !alance of :6))$))).
notes receiva!le :6))$)))
accepta!le?
u# t a p g eue cep g
Au#it ampling euenceAu#it a
mpling euence
-
7/18/2019 AUDIT SAMPLING CONCEPTS
87/123
11 - &%Copyright 2003 Pearson Education Canada Inc.
1. @etermine the o!/ectives of the test.
2. @eci#e if au#it sampling applies.
@oes
the au#itorplan to reachconclusions
!ase# on asample?
p g p g
Au#it ampling euenceAu#it a
mpling euence
-
7/18/2019 AUDIT SAMPLING CONCEPTS
88/123
11 - &&Copyright 2003 Pearson Education Canada Inc.
1. @etermine the o!/ectives of the test.
2. @eci#e if au#it sampling applies.3. @efine misstatement con#itions.
?
p g p g
Au#it ampling euenceAu#it a
mpling euence
-
7/18/2019 AUDIT SAMPLING CONCEPTS
89/123
11 - &(Copyright 2003 Pearson Education Canada Inc.
1. @etermine the o!/ectives of the test.
2. @eci#e if au#it sampling applies.3. @efine misstatement con#itions.
isstatementcon#itions are an0 con#itions
that represent monetar0 frau#$errors or irregularities
in the accountingrecor#s.
p g p g
Au#it ampling euenceAu#it a
mpling euence
-
7/18/2019 AUDIT SAMPLING CONCEPTS
90/123
11 - ()Copyright 2003 Pearson Education Canada Inc.
1. @etermine the o!/ectives of the test.
2. @eci#e if au#it sampling applies.3. @efine misstatement con#itions.4. @efine the population.
?
p g p g
Au#it ampling euenceAu#it a
mpling euence
-
7/18/2019 AUDIT SAMPLING CONCEPTS
91/123
11 - (1Copyright 2003 Pearson Education Canada Inc.
1. @etermine the o!/ectives of the test.
2. @eci#e if au#it sampling applies.3. @efine misstatement con#itions.4. @efine the population.
notes
receiva!le#ollars
p g p g
Au#it ampling euenceAu#it a
mpling euence
-
7/18/2019 AUDIT SAMPLING CONCEPTS
92/123
11 - (2Copyright 2003 Pearson Education Canada Inc.
1. @etermine the o!/ectives of the test.
2. @eci#e if au#it sampling applies.3. @efine misstatement con#itions.4. @efine the population.
5. @efine the sampling unit.
?
p g p g
Au#it ampling euenceAu#it a
mpling euence
-
7/18/2019 AUDIT SAMPLING CONCEPTS
93/123
11 - (3Copyright 2003 Pearson Education Canada Inc.
1. @etermine the o!/ectives of the test.
2. @eci#e if au#it sampling applies.3. @efine misstatement con#itions.4. @efine the population.
5. @efine the sampling unit.one
customer
name or loannum!er
p g p g
Au#it ampling euenceAu#it a
mpling euence
-
7/18/2019 AUDIT SAMPLING CONCEPTS
94/123
11 - (4Copyright 2003 Pearson Education Canada Inc.
1. @etermine the o!/ectives of the test.
2. @eci#e if au#it sampling applies.3. @efine misstatement con#itions.4. @efine the population.
5. @efine the sampling unit.6. pecif0 tolera!le misstatement.
What amount of monetar0 frau#$ error
or irregularit0 can e*ist in notes receiva!lewithout causing the financial statements to
!e materiall0 misstate#?
p g p g
Au#it ampling euenceAu#it a
mpling euence
-
7/18/2019 AUDIT SAMPLING CONCEPTS
95/123
11 - (5Copyright 2003 Pearson Education Canada Inc.
6. pecif0 tolera!le misstatement.
!ase# onau#itor /u#gment
p g g
What amount of monetar0 frau#$ erroror irregularit0 can e*ist in notes receiva!lewithout causing the financial statements to
!e materiall0 misstate#?
Au#it ampling euenceAu#it a
mpling euence
-
7/18/2019 AUDIT SAMPLING CONCEPTS
96/123
11 - (6Copyright 2003 Pearson Education Canada Inc.
6. pecif0 tolera!le misstatement.
>n the notes
receiva!le e*ample$ tolera!le mis-statement is esta!lishe# at :24$)))for !oth over- an# un#erstatements.
p g
What amount of monetar0 frau#$ erroror irregularit0 can e*ist in notes receiva!lewithout causing the financial statements to
!e materiall0 misstate#?
Au#it ampling euenceAu#it a
mpling euence
-
7/18/2019 AUDIT SAMPLING CONCEPTS
97/123
11 - (%Copyright 2003 Pearson Education Canada Inc.
%. pecif0 accepta!le risk of incorrect
acceptance.
What level of risk is theau#itor willing to take of conclu#ing
that the account !alance is not materi-all0 misstate# when$ in fact$ it is
materiall0 misstate#.
p g
Au#it ampling euenceAu#it a
mpling euence
-
7/18/2019 AUDIT SAMPLING CONCEPTS
98/123
11 - (&Copyright 2003 Pearson Education Canada Inc.
%. pecif0 accepta!le risk of incorrect
acceptance.What level of risk is the
au#itor willing to take of conclu#ing
that the account !alance is not materi-all0 misstate# when$ in fact$ it is
materiall0 misstate#.
also !ase# onau#itor /u#gment
g
Au#it ampling euenceAu#it a
mpling euence
-
7/18/2019 AUDIT SAMPLING CONCEPTS
99/123
11 - ((Copyright 2003 Pearson Education Canada Inc.
%. pecif0 accepta!le risk of incorrect
acceptance.What level of risk is the
au#itor willing to take of conclu#ingthat the account !alance is not materi-
all0 misstate# when$ in fact$ it ismateriall0 misstate#.
>n thenotes receiva!le e*ample$A>A is esta!lishe# at 5H.
Au#it ampling euenceAu#it a
mpling euence
-
7/18/2019 AUDIT SAMPLING CONCEPTS
100/123
11 - 1))Copyright 2003 Pearson Education Canada Inc.
&. 7stimate misstatements in the population.
What is the amount of mis-statement that the au#itor e*pects
to fin# in the population?
Au#it ampling euenceAu#it a
mpling euence
-
7/18/2019 AUDIT SAMPLING CONCEPTS
101/123
11 - 1)1Copyright 2003 Pearson Education Canada Inc.
What is the amount of mis-statement that the au#itor e*pects
to fin# in the population?
!ase# on
au#itor /u#gment an# prior0ear results
&. 7stimate misstatements in the population.
Au#it ampling euenceAu#it a
mpling euence
-
7/18/2019 AUDIT SAMPLING CONCEPTS
102/123
11 - 1)2Copyright 2003 Pearson Education Canada Inc.
What is the amount of mis-statement that the au#itor e*pects
to fin# in the population?
>n the e*ample$
7C7 is 1.5H" i.e.$ the au#itore*pects that 1.5H of the notes
receiva!le !alance is misstate#.
&. 7stimate misstatements in the population.
Au#it ampling euenceAu#it a
mpling euence
-
7/18/2019 AUDIT SAMPLING CONCEPTS
103/123
11 - 1)3Copyright 2003 Pearson Education Canada Inc.
(. @etermine the initial sample si'e.
8or nonstatistical sampling$
professional /u#gment of au#itor is use# to #etermine initial sample si'e.
Au#it ampling euenceAu#it a
mpling euence
-
7/18/2019 AUDIT SAMPLING CONCEPTS
104/123
11 - 1)4Copyright 2003 Pearson Education Canada Inc.
(. @etermine the initial sample si'e.
8or statistical sampling of test of
controls$ population si'e$ D7$ AA9$ an# 7C7 are all factors use# to #etermine initial sample
si'e.
-
7/18/2019 AUDIT SAMPLING CONCEPTS
105/123
11 - 1)5Copyright 2003 Pearson Education Canada Inc.
Au#it ampling euenceAu#it ampling euence
1). elect the sample.
onpro!a!ilistic,- @irecte# sample selection
- ;lock sample selection
-
-
7/18/2019 AUDIT SAMPLING CONCEPTS
106/123
11 - 1)6Copyright 2003 Pearson Education Canada Inc.
Au#it ampling euenceAu#it ampling euence
1). elect the sample.
Cro!a!ilistic,- imple ran#om sample selection
- 0stematic sample selection
- Cro!a!ilit0 proportionate-to-si'e sample selection
Au#it ampling euenceAu#it a
mpling euence
-
7/18/2019 AUDIT SAMPLING CONCEPTS
107/123
11 - 1)%Copyright 2003 Pearson Education Canada Inc.
11. Cerform the au#it proce#ures.
Dhrough confirmation
of selecte# notes receiva!le!alances$ :1$3&) of misstatements
were #iscovere# in a sampleof :35$5)).
Canada 48
Au#it ampling euenceAu#it a
mpling euence
-
7/18/2019 AUDIT SAMPLING CONCEPTS
108/123
11 - 1)&Copyright 2003 Pearson Education Canada Inc.
12. Kenerali'e from the sample to the
population.
Cro/ect the sample misstatementresults to the population an# consi#ersampling error an# sampling risk,
sample misstatement total recor#e# point estimate
total sample pop. value of misstatement* G
Au#it ampling euenceAu#it a
mpling euence
-
7/18/2019 AUDIT SAMPLING CONCEPTS
109/123
11 - 1)(Copyright 2003 Pearson Education Canada Inc.
12. Kenerali'e from the sample to the
population.Cro/ect the sample misstatement
results to the population an# consi#ersampling error an# sampling risk,
>n the notes receiva!le e*ample,
sample misstatement total recor#e# point estimate total sample pop. value of misstatement* G
:1$3&):35$5))
* :6))$))) G :23$324 point estimate
Au#it ampling euenceAu#it a
mpling euence
-
7/18/2019 AUDIT SAMPLING CONCEPTS
110/123
11 - 11)Copyright 2003 Pearson Education Canada Inc.
12. Kenerali'e from the sample to the
population.
tolera!le misstatement - point estimateG allowance for sampling error
:24$))) - :23$324 G :6%6
Dhe au#itor must also /u#gmentall0
assess sampling error$ consi#ering severalfactors. Dhe most important of these factorsis the #ifference !etween the point estimate
an# tolera!le misstatement.
Au#it ampling euenceAu#it a
mpling euence
-
7/18/2019 AUDIT SAMPLING CONCEPTS
111/123
11 - 111Copyright 2003 Pearson Education Canada Inc.
12. Kenerali'e from the sample to the
population.Dhe au#itor must also /u#gmentall0
assess sampling error$ consi#ering severalfactors. Dhe most important of these factorsis the #ifference !etween the point estimate
an# tolera!le misstatement.
>n the notes receiva!le e*ample,
tolera!le misstatement - point estimateG allowance for sampling error
:24$))) - :23$324 G :6%6
Au#it ampling euenceAu#it a
mpling euence
-
7/18/2019 AUDIT SAMPLING CONCEPTS
112/123
11 - 112Copyright 2003 Pearson Education Canada Inc.
13. Anal0'e e*ceptions or
misstatements.
evaluate the naturean# cause of each
misstatement
Au#it ampling euenceAu#it a
mpling euence
-
7/18/2019 AUDIT SAMPLING CONCEPTS
113/123
11 - 113Copyright 2003 Pearson Education Canada Inc.
13. Anal0'e the e*ceptions or
misstatements.evaluate the nature an#
cause of each misstatement
Dhis evaluation ma0affect the au#itors conclu-sions regar#ing financial
statements$ client operations$an#Eor other areas.
Au#it ampling euenceAu#it a
mpling euence
-
7/18/2019 AUDIT SAMPLING CONCEPTS
114/123
11 - 114Copyright 2003 Pearson Education Canada Inc.
14. @etermine the accepta!ilit0 of the
population.
@ecision ule,
9onsi#ering sampling error$ if the pointestimate is less than the tolera!le mis-statement$ accept the conclusion that
the !ook value is not misstate# !0 amaterial amount.
@ecision ule,9onsi#ering sampling error$ if the point
-
7/18/2019 AUDIT SAMPLING CONCEPTS
115/123
11 - 115Copyright 2003 Pearson Education Canada Inc.
>n the notes receiva!le e*ample,
g p g $ pestimate is less than the tolera!le mis-
statement$ accept the conclusion thatthe !ook value is not misstate# !0 amaterial amount.
original point estimate estimate of point estimate incl. of misstatement sampling error sampling error
N G
:23$324 N :1$5)) G :24$&2
/u#gmentall0#etermine#
conclusion?
@ecision ule,9onsi#ering sampling error$ if the point
-
7/18/2019 AUDIT SAMPLING CONCEPTS
116/123
11 - 116Copyright 2003 Pearson Education Canada Inc.
:24$&24J:24$))) tolera!lemisstatement
Dhe notes receiva!le !alanceof :6))$))) is not accepta!le.
>n the notes receiva!le e*ample,
g p g $ pestimate is less than the tolera!le mis-
statement$ accept the conclusion thatthe !ook value is not misstate# !0 amaterial amount.
original point estimate estimate of point estimate incl. of misstatement sampling error sampling error
N G
:23$324 N :1$5)) G :24$&2
conclusion?
-
7/18/2019 AUDIT SAMPLING CONCEPTS
117/123
11 - 11%Copyright 2003 Pearson Education Canada Inc.
What are theWhat are the
au#itorsau#itors
optionsoptions??
!ook valueis not
accepta!le
What are theWhat are the
!ook value
-
7/18/2019 AUDIT SAMPLING CONCEPTS
118/123
11 - 11&Copyright 2003 Pearson Education Canada Inc.
- take no action until tests of other au#it areas are complete#
au#itorsau#itorsoptionsoptions??
!ook valueis not
accepta!le
What are theWhat are the
!ook value
-
7/18/2019 AUDIT SAMPLING CONCEPTS
119/123
11 - 11(Copyright 2003 Pearson Education Canada Inc.
- take no action until tests of other au#it areas are complete#- perform e*pan#e# au#it tests in specific areas
What are the
au#itorsau#itorsoptionsoptions??
!ook valueis not
accepta!le
What are theWhat are the
!ook value
-
7/18/2019 AUDIT SAMPLING CONCEPTS
120/123
11 - 12)Copyright 2003 Pearson Education Canada Inc.
- take no action until tests of other au#it areas are complete#- perform e*pan#e# au#it tests in specific areas- increase sample si'e
What are the
au#itorsau#itorsoptionsoptions??
!ook valueis not
accepta!le
What are theWhat are the
!ook value
-
7/18/2019 AUDIT SAMPLING CONCEPTS
121/123
11 - 121Copyright 2003 Pearson Education Canada Inc.
- take no action until tests of other au#it areas are complete#- perform e*pan#e# au#it tests in specific
areas- increase sample si'e- reuest the account !alance !e a#/uste#
at a e t e
au#itorsau#itorsoptionsoptions??
!ook valueis not
accepta!le
What are theWhat are the
!ook value
-
7/18/2019 AUDIT SAMPLING CONCEPTS
122/123
11 - 122Copyright 2003 Pearson Education Canada Inc.
- take no action until tests of other au#it areas are complete#- perform e*pan#e# au#it tests in specific areas
- increase sample si'e- reuest the account !alance !e a#/uste#-reuest the client to correct
the population
au#itorsau#itorsoptionsoptions??
!ook valueis not
accepta!le
What are theWhat are the
!ook value
-
7/18/2019 AUDIT SAMPLING CONCEPTS
123/123
- take no action until tests of other au#it areas are complete#- perform e*pan#e# au#it tests in specific areas
- increase sample si'e- reuest the account !alance !e a#/uste#- reuest the client to correct the population
au#itorsau#itorsoptionsoptions??
!ook valueis not
accepta!le