Vous êtes sur la page 1sur 22

Auditing I Lecturer:

Chapter 8 (Audit Sampling: An Overview and Application to

Tests of Controls) Mr. Freddy Loing

Group 4 (Telolet) Accounting Class 4 (Monday 07.30 – 10.00):

Amellia Samantha / 008201500036
Fajar Widya Kusumah / 008201400035
Ginsi Trianesti / 008201500117
Lyra Raisa / 008201500122
Muhammad Ihsan / 008201500124
Exercise 8-2
Distinguish between Type I and Type II errors. What terms are used
to describe these errors when the auditor is conducting tests of
controls and substantive tests? What costs are potentially incurred
by auditors when such decision errors occur?

Type I and Type II errors are the two types of decision errors an
auditor can make when deciding that sample evidence supports or does
not support a test of controls or a substantive test based on a sampling
In reference to a test of controls, Type I and Type II errors are:
• Risk of incorrect rejection (Type I): the risk that the assessed level of
control risk based on the sample is greater than the true operating
effectiveness of the control. Also commonly referred to as the risk of
assessing control risk too high or the risk of under reliance.
• Risk of incorrect acceptance (Type II): the risk that the assessed level
of control risk based on the sample is less than the true operating
effectiveness of the control. Also commonly referred as the risk of
assessing control risk too low or the risk of overreliance.
In reference to substantive tests, Type I and Type II
errors as follows:
• Risk of incorrect rejection (Type I): the risk that the
sample supports the conclusion that the recorded
account balance is materially misstated when it is not
materially misstated.
• Risk of incorrect acceptance (Type II): the risk that
the sample supports the conclusion that the recorded
account balance is not materially misstated when it is
materially misstated.
The risk of incorrect rejection relates to the
efficiency of the audit because such errors can result in
the auditor’s conducting more audit work than
necessary in order to reach the correct conclusion. The
risk of incorrect acceptance relates to the effectiveness
of the audit because such errors can result in the
auditor failing to detect a material misstatement in the
financial statements. This can lead to litigation against
the auditor by the parties who relied on the financial
Exercise 8-3

List audit evidence choices that do not involve sampling and

provide an example of a situation where an auditor would not
use audit sampling.

Audit evidence choices that do not involve audit sampling include:

• Analytical procedures.
• Scanning.
• Inquiry.
• Observation.
• Procedures applied to every item in the population.
• Classes of transactions or account balances not tested.
• Tests of automated information technology controls.
Examples of situations where audit sampling would
not be used include:
• Procedures applied to every item in the account or
population (typically due to a small number of large
• Classes of transactions or account balances not tested
• Tests of automated information technology controls
Exercise 8-4

Distinguish between non-statistical and statistical sampling.

What are the advantages and disadvantages of using statistical

Non-statistical sampling is an approach in which the auditor

uses a haphazard selection technique or uses judgment in either or
both of the following steps:
• Determining the sample size
• Calculating the computed upper deviation rate
Non-statistical sampling doesn’t require the use of statistical
theory to determine sample size or in the evaluation of sampling risk.
Statistical sampling, on the other hand, uses the laws of probability
to determine sample size, to select, and to evaluate the results of an
audit sample. The use of statistical theory permits the auditor to
quantify the sampling risk for the purpose of reaching a conclusion
about the population.
The major advantages of a statistical sampling
application are that it helps the auditor to:
(1) Design an efficient sample
(2) Measure the sufficiency of evidence obtained
(3) Quantify sampling risk.
The disadvantages of statistical sampling include
the additional costs of (1) training auditors in the proper
use of sampling techniques and (2) the added complexity
of designing and conducting the sampling application.
Exercise 8-7

List the four factors that enter into the sample size
decision. What is the relationship between sample
size and each of these factors?
The four factors that enter into the sample size
decision and their relationship with sample size are:
Factor Relationship to Sample Size
The risk of incorrect rejection Inverse
The tolerable deviation rate Inverse
The expected population Direct
deviation rate
The population size Decreases sample size only when
population size is small (<500 items)
Exercise 8-8

In performing certain audit procedures, the auditor may encounter voided

documents, inapplicable documents, missing documents, or the auditor may
strop testing before examining all the items selected for the sample. How
should each of these situations be handled within the attribute-sampling
Each of these situations should be handled in the following manner
for an attribute sampling application:
• Voided documents: If the transaction has been properly voided, it does
not represent a deviation. The item should be replaced with a new sample
• Unused or inapplicable documents: Sometimes a selected item is not
appropriate for the definition of the control. In such a case, the item is not
a deviation and the auditor would simply replace the item with another
purchase transaction.
• Missing documents: If the auditor is unable to examine a document or
use an alternative procedure to test whether the control was adequately
performed, the sample item is a deviation for purposes of evaluating the
sample results.
• Stopping the test before completion:
If a large number of deviations are detected
early in the tests of controls, the auditor should
consider stopping the test, as soon as it is clear that the
results of the test will not support the planned assessed
level of control risk. The client should be informed and
the exceptions would be considered a control
deficiency unless remediation and retesting are
Exercise 8-9

The auditor should evaluate the qualitative aspects of

deviations found in a sampling application. What are the
purposes of evaluating qualitative aspects of deviations?

The auditor’s purposes in evaluating the qualitative

aspects of deviations in performing error analysis involves
(1) The nature of the deviations and their causes
(2) How these deviations may impact the other phases of
the audit.
Problem 8-15

Determine the sample size for each of the control activities

shown in the following table (assuming a large population):
By using table 8-5 and 8-6 in page 271-272, here are the
Control Activity
Parameters 1 2 3 4
Risk of incorrect acceptance 5% 5% 10% 10%
Tolerable deviation rate 4% 5% 7% 8%
Expected population deviation rate 1% 2% 3% 4%
Sample size 156 181 94 98
Problem 8-16
Using the sample sizes determined in Problem 8-15 and the
number of deviations shown here, determine the sample deviation
rate, computed upper deviation rate, and the auditor’s conclusion
(i.e. testing results do or do not support operating effectiveness of
the control) for each control activity.
Control Activity
Results 1 2 3 4
Number of deviations 0 5 4 3
Sample size 156 181 94 98
Sample deviation rate 0.0 2.8 4.3 3.1
Computed upper deviation rate 2.0 6.9 8.7 7.3
Auditor’s conclusion Supports Doesn’t Doesn’t Supports
support support
Chapter 9
Audit Sampling: An Application to
Substantive Tests of Account Balances
Exercise 9-7

How do the desired confidence level, risk of material misstatement,

and tolerable and expected misstatements affect the sample size in a
non-statistical sampling application?
Variation in the population, the risk of incorrect
acceptance, and tolerable and expected misstatement affect
sample size in the following way:
• Variation in the population: As the variation in the population
increases, sample size increases.
• Desired confidence level: As the desired confidence level
increases, the required sample size increases.
• Tolerable and expected misstatement: As tolerable misstatement
increases, sample size decreases, while an increase in expected
misstatement results in an increase in sample size.
Problem 9-14

The audit firm of Johnson and Johnson has decided to design

a non-statistical sample to examine the accounts receivable
balance of Francisco Fragrances at 31 October. As of 31
October, there were 1,500 accounts receivable accounts with
a balance of €5.5 million. The accounts receivable population
can be segregated into the following strata:
Jonathan L. Gren, senior-in-charge of the audit, has made the
following decisions:
• Based on the results of the tests of controls and risk
assessment procedures, a low assessment is made for the
risk of material misstatement.
• The desired confidence level is moderate.
• The tolerable misstatement allocated to accounts
receivable is €155,000, and the expected misstatement is
• All the balances greater than €50,000 will be audited.
a. Using the non-statistical sampling formula included in the
textbook, compute the suggested sample size for this test.
b. Gren confirmed the accounts receivable accounts
selected and noted the following results:

Using ratio projection, what is the total

projected misstatement? What conclusion should
Gren make concerning the accounts receivable

A. Remove the 10 accounts (€750,000) from the sampling

population because they will be the subject of 100%
testing. Sample size is calculated as follows:

sampling population book value

Sample size = x confidence factor
tolerable – expected misstatement

Sample size = x 1,2 = 57
€155.000− €55.000

B. The projected misstatement for the accounts receivable account

is :
Strata Amount of Ratio of misstatement Projected
Misstatement in strata sampled misstatement
> €50,000 €3,500 N/A 100%of Stratum tested €3,500
> €5,000 15,250 15,250*(3,000,000/910,000) 50,275
< €5,000 1,550 1,550*(1,750,000/70,000) 38,750
Projected Misstatement €92,525

Since the project misstatement is significantly greater than

the expected misstatement (€55,000), Gren should conclude that
there is an unacceptably high risk that the true misstatement
exceeds the tolerable misstatement.