Académique Documents
Professionnel Documents
Culture Documents
Audit Sampling
Concepts
Copyright
11 - 1
Copyright
11 - 2
Copyright
11 - 3
Copyright
11 - 4
?
Copyright
11 - 5
11 - 6
Copyright
11 - 7
Copyright
11 - 8
?
Copyright
11 - 9
oops!
Copyright
11 - 10
Copyright
11 - 11
Copyright
11 - 12
Copyright
11 - 13
nonstatistical sampling
statistical sampling
Copyright
11 - 14
nonstatistical sampling
primary
advantage:
employs
auditors
experience
and
judgment
statistical sampling
primary
advantage:
the audit
risk can be
quantified
Copyright
11 - 15
nonstatistical sampling
primary
advantage:
employs
auditors
experience
and
judgment
statistical sampling
primary
advantage:
the
sampling
risk can be
quantified
Copyright
11 - 16
nonstatistical sampling
judgmentally
determine sample size
implicitly recognizing
relevant factors
statistical sampling
determine sample size
explicitly recognizing
relevant factors
Copyright
11 - 17
nonstatistical sampling
statistical sampling
judgmentally
determine sample size
implicitly recognizing
relevant factors
judgmentally select a
representative sample
randomly select a
representative sample
Copyright
11 - 18
nonstatistical sampling
statistical sampling
judgmentally
determine sample size
implicitly recognizing
relevant factors
judgmentally select a
representative sample
randomly select a
representative sample
Copyright
11 - 19
nonstatistical sampling
statistical sampling
judgmentally
determine sample size
implicitly recognizing
relevant factors
judgmentally select a
representative sample
randomly select a
representative sample
Copyright
11 - 20
nonstatistical sampling
judgmentally select a
representative sample
sample selection
Copyright
11 - 21
nonstatistical sampling
judgmentally select a
representative sample
sample selection
Copyright
11 - 22
nonstatistical sampling
judgmentally select a
representative sample
sample selection
Copyright
11 - 23
nonstatistical sampling
judgmentally select a
representative sample
sample selection
11 - 24
nonstatistical sampling
judgmentally select a
representative sample
sample selection
324
date
Example:
CANADIAN BANK
examine all
cancelled
cheques of February
Copyright
11 - 25
nonstatistical sampling
judgmentally select a
representative sample
sample selection
Beware
of bias!
Copyright
11 - 26
statistical sampling
randomly select a
representative sample
sample selection
Copyright
11 - 27
statistical sampling
randomly select a
representative sample
sample selection
11 - 28
statistical sampling
randomly select a
representative sample
sample selection
11 - 29
statistical sampling
randomly select a
representative sample
sample selection
11 - 30
statistical sampling
randomly select a
representative sample
sample selection
Copyright
11 - 31
statistical sampling
randomly select a
representative sample
sample selection
Copyright
11 - 32
statistical sampling
randomly select a
representative sample
sample selection
discussed in
chapter 14
Copyright
11 - 33
Audit Sampling
Copyright
11 - 34
Audit Sampling
Audit
sampling is a
method used
to determine the
proportion of
population items
containing a
particular attribute.
Copyright
11 - 35
Copyright
11 - 36
When is audit
sampling
appropriate?
tests of
controls
SALES INVOICE
Ace Company
834 Reynolds Rd.
Winnipeg, MB R2V 4E3
Sales Representative:
Quantity Description
38527
Date:
Customer:
Price
Example:
credit
authorization
of sales
Credit authorization:
Copyright
11 - 37
Copyright
11 - 38
Copyright
11 - 39
11 - 40
Copyright
11 - 41
11 - 42
11 - 43
- attribute
- acceptable risk of assessing control
risk too low (ARACR)
- tolerable exception rate (TER)
- estimated population exception rate
(EPER)
- initial sample size
- exception
- sample exception rate (SER):
number of exceptions
sample size
Copyright
11 - 44
11 - 45
?
Copyright
11 - 46
Audit Sampling
Sequence
SALES INVOICE
38527
Date:
Customer:
1. StateAcme
the
objectives of the audit test.
Company
834 Reynolda Rd.
Winnipeg, MB R2V 4E3
Sales Representative:
Quantity Description
11 - 47
yes
audit
sampling
is
appropriate
Copyright
no
audit
sampling
is not
appropriate
11 - 48
In the
example, what is
the attribute?
Copyright
11 - 49
Audit Sampling
Sequence
SALES INVOICE 38527
Date:
3. Define attributes
and
exception
Acme Company
Customer:
conditions.834 Reynolda Rd.
the
signature
of the
credit
manager
on the
sales
invoice
In the
example, what is
Est. shipment
date:attribute?
the
Price
Joe Credit
Credit authorization:
Copyright
11 - 50
In the
example, what is
the exception
condition?
Copyright
11 - 51
Audit Sampling
Sequence
SALES INVOICE 38527
Date:
3. Define attributes
and
exception
Acme Company
Customer:
conditions.834 Reynolda Rd.
Winnipeg, MB R2V 4E3
Sales Representative:
Quantity Description
forged signature
of credit manager, no signature,
signature of
someone else
Price
In the
example, what is
Est. shipment date:
the
exception
Terms of sale
(including
discounts and freight
total invoice amount
costs):
condition?
Carrier:
Credit authorization:
Jill Accountant
Copyright
11 - 52
In the
example, what is the
population?
Copyright
11 - 53
In the
example, what is the
population?
2004 sales invoices
(sequence 10397 - 40465)
Population size = 30,068.
Copyright
11 - 54
In the
example, what is the
sampling unit?
Copyright
11 - 55
In the
example, what is the
sampling unit?
one
sales invoice
Copyright
11 - 56
Copyright
11 - 57
11 - 58
TER = 7%
Copyright
11 - 59
Copyright
11 - 60
11 - 61
To what degree
does the auditor want
to rely on controls?
Copyright
11 - 62
To what degree
does the auditor want
to rely on controls?
low reliance on controls = high ARACR
high reliance on controls = low ARACR
Copyright
11 - 63
ARACR = medium
Copyright
11 - 64
EPER = 4%
Copyright
11 - 65
considered
initial because
the auditor may
later decide to
sample more
Copyright
11 - 66
pop.
TER
ARACR
EPER
=
=
=
=
30,068
7%
10%
4%
Copyright
11 - 67
RELATIONSHIP
TO SAMPLE SIZE
inverse
inverse
direct
no effect
(if pop.> 5,000)
Copyright
11 - 68
pop.
TER
ARACR
EPER
=
=
=
=
30,068
7%
medium
4%
11 - 69
Audit Sampling
Sequence
SALES
INVOICE 38527
Date:
10. Select the sample.
Acme Company
Customer:
11. Perform the
audit Rd.
procedures.
834 Reynolda
Winston-Salem, NC27109
Sales Representative:
Quantity Description
how?
Price
Copyright
Joe Credit
2003 Pearson Education Canada Inc.
11 - 70
SALES INVOICE
38527
Audit Sampling
Sequence
Acme Company
Date:
Customer:
Of 150
invoices
examined, 7
had no
credit
approval.
Price
Joe Credit
Copyright
11 - 71
= 7
11 - 72
= 8%
= 7
11 - 73
CUER
= 8%
What does
this mean?
Copyright
11 - 74
CUER
= 8%
There is a medium
risk (ARACR) that the
true exception rate > 8%
Copyright
11 - 75
In the example, the auditors found 7 sales invoices without credit approval. Could they be
sales to internal departments or subsidiaries?
Copyright
11 - 76
Decision rule:
For population acceptability:
11 - 77
Decision rule:
The population is
not acceptable; the controls regarding the
indication of credit approval on sales
invoices are not satisfactory.
Copyright
11 - 78
Copyright
11 - 79
11 - 80
When is this
appropriate?
Copyright
11 - 81
11 - 82
Copyright
11 - 83
11 - 84
Copyright
11 - 85
notes receivable
$600,000
acceptable?
Copyright
11 - 86
11 - 87
?
Copyright
11 - 88
Copyright
11 - 89
?
Copyright
11 - 90
notes
receivable
dollars
Copyright
11 - 91
?
Copyright
11 - 92
one
customer
name or loan
number
Copyright
11 - 93
11 - 94
based on
auditor judgment
Copyright
11 - 95
11 - 96
Copyright
11 - 97
also based on
auditor judgment
Copyright
11 - 98
In the
notes receivable example,
ARIA is established at 5%.
Copyright
11 - 99
Copyright
11 - 100
11 - 101
11 - 102
Copyright
11 - 103
Copyright
11 - 104
Copyright
11 - 105
11 - 106
Through confirmation
of selected notes receivable
balances, $1,380 of misstatements
were discovered in a sample
of $35,500.
Copyright
11 - 107
total recorded
pop. value
Copyright
point estimate
of misstatement
11 - 108
total recorded
pop. value
point estimate
of misstatement
11 - 109
11 - 110
11 - 111
11 - 112
11 - 113
11 - 114
Decision Rule:
Considering sampling error, if the point
estimate is less than the tolerable misstatement, accept the conclusion that
the book value is not misstated by a
material amount.
conclusion?
11 - 115
Decision Rule:
Considering sampling error, if the point
estimate is less than the tolerable misstatement, accept the conclusion that
the book value is not misstated by a
material amount.
$24,824>$24,000 tolerable
misstatement
The notes receivable balance
of $600,000 is not acceptable.
Copyright
11 - 116
book value
is not
acceptable
Copyright
11 - 117
book value
is not
acceptable
Copyright
11 - 118
book value
is not
acceptable
Copyright
11 - 119
book value
is not
acceptable
11 - 120
book value
is not
acceptable
11 - 121
book value
is not
acceptable
book value
is not
acceptable
11 - 123