Premium Essay

Submitted By tukai334

Words 2468

Pages 10

Words 2468

Pages 10

Tad Miller

Classical Variables Sampling

LEARNING OBJECTIVE Understand the basic process underlying classical variables sampling in an audit examination.

When performing substantive procedures, one approach is classical variables sampling. Classical variables sampling methods use normal distribution theory and the Central Limit Theorem to provide a range estimate of the account balance. The auditor uses the sample estimates to determine whether the account balance is fairly stated. The Central Limit Theorem indicates larger sample sizes provide a sampling distribution that more closely reflects a normal distribution. Therefore, larger sample sizes will yield a lower level of sampling risk. In this section, we briefly illustrate mean-per-unit classical variables sampling. We illustrate the manual calculations necessary to determine sample size and evaluate sample results. However, if clients maintain records in electronic format, auditors typically use computer software to perform these tasks.

Classical Variables Sampling: Planning

In the planning stages of classical variables sampling, the auditor determines the objective of sampling, defines the attribute of interest, and defines the population. We will utilize the basic information from Rice, Inc.'s accounts receivable introduced in the previous section. Recall that Rice's accounts receivable are comprised of 1,505 individual customer accounts which are recorded at $416,000. Also recall that the auditor is interested in evaluating the existence or occurrence assertion and the valuation and...

Premium Essay

...Sampling Sampling Third Edition STEVEN K. THOMPSON Simon Fraser University A JOHN WILEY & SONS, INC., PUBLICATION Copyright © 2012 by John Wiley & Sons, Inc. All rights reserved. Published by John Wiley & Sons, Inc., Hoboken, New Jersey. Published simultaneously in Canada. No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording, scanning, or otherwise, except as permitted under Section 107 or 108 of the 1976 United States Copyright Act, without either the prior written permission of the Publisher, or authorization through payment of the appropriate per-copy fee to the Copyright Clearance Center, Inc., 222 Rosewood Drive, Danvers, MA 01923, (978) 750-8400, fax (978) 750-4470, or on the web at www.copyright.com. Requests to the Publisher for permission should be addressed to the Permissions Department, John Wiley & Sons, Inc., 111 River Street, Hoboken, NJ 07030, (201) 748-6011, fax (201) 748-6008, or online at http://www.wiley.com/go/permission. Limit of Liability/Disclaimer of Warranty: While the publisher and author have used their best efforts in preparing this book, they make no representations or warranties with respect to the accuracy or completeness of the contents of this book and speciﬁcally disclaim any implied warranties of merchantability or ﬁtness for a particular purpose....

Words: 10191 - Pages: 41

Free Essay

...Sampling Douglas P. Shumski April 27, 2014 MATH301-1402A-01 Susan Lee 1. In your own words, discuss the differences between discrete and continuous random variables because the statistical analysis of each type of variable is different. Discrete Variable – This type of variable is only in the form of a particular value, and does not consider any values that may fall in between each particular value. The example that I would provide here would be that I have two children. I do not have 2.8 children. Continuous Random Variable - This type of variable can take on any value that is available on a range. My example of this type of variable would be the measure of temperature. The temperature can be measured in tenths, such as 86.9 degrees, and not the whole number of 87 degrees. A person’s individual height or weight could also be considered as a continuous random variable. 2....

Words: 589 - Pages: 3

Premium Essay

...SAMPLING Definition: the act, process, or technique of selecting a representative part of a population for the purpose of determining parameters or characteristics of the whole population. TYPES OF SAMPLING TECHNIQUES: Cluster sampling Cluster sampling is a sampling technique where the entire population is divided into groups, or clusters and a random sample of these clusters are selected. All observations in the selected clusters are included in the sample. Cluster sampling is typically used when the researcher cannot get a complete list of the members of a population they wish to study but can get a complete list of groups or 'clusters' of the population. It is also used when a random sample would produce a list of subjects so widely scattered that surveying them would prove to be far too expensive, for example, people who live in different counties in the Country. Advantages One advantage of cluster sampling is that it is cheap, quick, and easy. Instead of sampling the entire country when using simple random sampling, the research can instead allocate resources to the few randomly selected clusters when using cluster sampling. A second advantage to cluster sampling is that the researcher can have a larger sample size than if he or she was using simple random sampling. Because the researcher will only have to take the sample from a number of clusters, he or she can select more subjects since they are more accessible....

Words: 1337 - Pages: 6

Premium Essay

...With the help of sampling frames, researchers are able to select the sample population from the target population that will be tested for the research or survey. A sampling frame should have the following characteristics: Completeness: A frame should be complete in a sense that all the individuals of the target population should be covered in the frame. In case we are...

Words: 4006 - Pages: 17

Premium Essay

...3. ANALYSIS AND INTREPRETATION Percentage analysis is the method to represent raw streams of data as a percentage (a part in 100 - percent) for better understanding of collected data. (For eg.) divide whatever numbers you have for instance 50/200=.25 multiply the result by 100 0.25x 100= 25 <--- this is the percentage 25% 3.1 TABLE SHOWING HOW LONG DEALING WITH POWERTECK S. No | Period | No of respondents | Percentage of respondents | 1 | >2 years | 10 | 20 | 2 | 2-5 years | 8 | 16 | 3 | 5-8 years | 12 | 24 | 4 | 8-10 years | 9 | 18 | 5 | 10-12 years | 11 | 22 | | Total | 50 | 100 | ANALYSIS The above table reveals that, 24% of the respondents being dealt with fall in the range of 5-8 years, 22% of the respondents being dealt with fall in the range of 10-22 years, 20% of the respondents being dealt with fall in the range of >2 years, 18% of the respondents being dealt with fall in the range of 8-10 years and remaning 16% of the respondents being dealt with fall in the range of 2-5 years. 3.2.1 CHART SHOWING HOW LONG DEALING WITH POWERTECK INTERPRETATION Majority of the respondents (24%) are being dealt with fall in the range of 5-8 years. 3.2 TABLE SHOWING THE PROMOTIONAL ACTIVITY S.No | Promotional activity | No of Respondents | Percentage of Respondents | 1 | Yes | 46 | 92 | 2 | No | 4 | 8 | | Total | 50 | 100 | ANALYSIS The above table reveals that, 92%...

Words: 3466 - Pages: 14

Premium Essay

...SAMPLING: In statistics and survey methodology, sampling is concerned with the selection of a subset of individuals from within a population to estimate characteristics of the whole population. The three main advantages of sampling are that the cost is lower, data collection is faster, and since the data set is smaller it is possible to ensure homogeneity and to improve the accuracy and quality of the data. The sampling process comprises several stages: * Defining the population of concern * Specifying a sampling frame, a set of items or events possible to measure * Specifying a sampling method for selecting items or events from the frame * Determining the sample size * Implementing the sampling plan * Sampling and data collecting PROBABILITY AND NON-PROBABILITY SAMPLING: A probability sampling scheme is one in which every unit in the population has a chance (greater than zero) of being selected in the sample, and this probability can be accurately determined. The combination of these traits makes it possible to produce unbiased estimates of population totals, by weighting sampled units according to their probability of selection. Non-probability sampling is any sampling method where some elements of the population have no chance of selection (these are sometimes referred to as 'out of coverage'/'under covered'), or where the probability of selection can't be accurately determined....

Words: 1788 - Pages: 8

Free Essay

...Unit 3 – Sampling Teri Isbell American InterContinental University Abstract Three different types of surveys will be discussed for sample size and how they compare to each other. A personal survey’s information is provided and the breakdown of the answers is shown in charts for review. A personal opinion regarding how survey information can be used with a business or other service is discussed. Introduction An entertainment, political, and general survey will be examined for sample size and discussed in this paper. A personal survey will also be reviewed and additional information will be discussed as to how they relate to each other and how the information could be used in a business or other setting. Part 1: Survey Analysis: Entertainment Social gaming is taking the desktop and console gaming world to new heights by attracting gamers that might not have every touched a video game before according to Shaer, (2010). He reports that 56.8 million American consumers over the age of 6 had participated in social game playing over the past three months. According to the U.S. Census Bureau, the 2010 population was 281,421,906, and Shaer’s 56.8 million consumers represent approximately 20% of the overall population. I was surprised to find the accuracy in Shaer’s numbers representing one-fifth of the U.S. population in 2010. That is a staggering number of people doing nothing more than playing games!...

Words: 2203 - Pages: 9

Free Essay

...PERSAMPELAN : MONEY LAUNDERING a) Maksud money laundering Money Laundering ialah memindahkan wang dari sumber yang diharamkan oleh undang-undang kepada wang yang bersih. Sebagai contoh kegiatan money laundering ialah membuat skim cepat kaya, mencuri lembu , menyeludup minyak secara haram dari Negara jiran dan kegiatan meminta sedekah secara haram.Selepas mendapat keuntungan dari kegiatan haram ini , mereka akan menggunakan hasil wang tersebut untuk membuka restoran sebagai contonhya, dan hasil dari perniagaan restoran ini dianggap bersih dan disimpan di dalam bank dan dianggap sah disisi undang undang. Contoh kes terbaru yang berkaitan dengan money laundering adalah kes Salim Miskin Resources.Kes ini masih lagi disiasat oleh pihak berkuasa diamana kes ini melibatkan organisasi ini terlibat dengan pengeluaran wang tanpa lesen yang dibernarkan oleh pihak kerajaan. b) Tatacara yang perlu digunakan oleh akauntan untuk atasi masalah ini? Pada tahun 1970 ,sebahagian daripada Akta Bank Kerahsiaan , bank-bank dan perniagaan lain dikehendaki melaporkan urus niaga yang melibatkan amaun melebihi $ 10,000 ( dalam bentuk wang tunai atau instrumen pembawa boleh niaga ) yang datang ke dalam atau keluar daripada Perakaunan Amerika Syarikat bagi bayaran ini , yang mesti dilaporkan dalam Borang 8300 . Institusi kewangan adalah tunjang utama dalam membateras jenayah yang tidak bermoral ini. "Kenali Pelanggan Anda " dasar bagi bank adalah penting untuk memastikan bahawa...

Words: 284 - Pages: 2

Premium Essay

...Some of these include probability sampling, non probability sampling, surveys, and questionnaires. Probability sampling is technique used where the samples are gathered in a process known as random selection. In order to have a random selection method, the researcher must set up some process or procedure that assures that the participants have equal probabilities of being chosen (Trochim, 2006). Some common types of probability sampling that will be discussed are: simple...

Words: 1536 - Pages: 7

Premium Essay

...One of the sampling techniques is attribute sampling. It is a statistical technique used to test a population on certain characteristics and to determine whether accounting controls are operating effectively. A relevant sequence on how to do attribute sampling is provided as follows: Determine the Test Objectives and Attributes, Determine Deviations Conditions, Define the Population to be...

Words: 1449 - Pages: 6

Premium Essay

...Logic of Sampling Name Institution The sampling of a given data especially population is very important in analysing information. This depends on the method used to sample a given set of data. The methods include random sampling, stratified sampling, and systematic sampling. Every sampling method uses logic in sampling of data. This involves the procedure in sampling of a given set of information. Random sampling The random numbers used from the random tables include 11168, 36318, 75064, 21215, 91791, 76831, 10468, 44482, 66558, and 12032. The data in the table provide is labelled in terms of two digits. 11168- 01, 11, 64 36318- 03, 63, 18 75064- 07, 50, 64 21215- 02, 12, 15 91791- 09, 17, 91 76831- 07, 68, 31 10468- 01, 04, 68 44482- 04, 44, 82 66538- 06, 65, 38 12032- 01, 20, 32 The first ten numbers from the random table within the boundaries of the data are selected. This does not include the repeating entry. The selected random numbers are from the list of random table numbers include 01, 11, 64, 03, 63, 18, 07, 50, 02, and 12. Names of the selected ten random numbers 1. Lauren Aaronson 2. Andrew Abbot 3. James Abbot 4. Saleha Abedin 5. Christopher Abells 6. Marjorie Abend-Wein 7. Jill Abood 8. Reed Adams 9. Evan Adelson 10. Francis Adeola Procedure in random sampling The procedure in random sampling uses random tables to determine the values to sample....

Words: 816 - Pages: 4

Premium Essay

...CHAPTER 9 Audit Sampling Review Questions 9-1 Nonstatistical sampling is an audit sampling technique in which the risk of sampling error is estimated by the auditors using professional judgment rather than by the laws of probability. Statistical sampling involves the quantification of the risk of sampling error through the use of mathematics and laws of probability. 9-2 Sampling risk is the possibility that the auditors will make an erroneous decision based on a sample result. To control sampling risk the auditors increase the size of their samples. Nonsampling risk is the risk of erroneous conclusions by the auditors based on any factor other then sampling. For example, the auditors may perform inappropriate tests, or they may not recognize errors in the sample items examined. Nonsampling risk may be controlled by adequate planning and supervision of engagements, and the establishment of effective quality control policies and procedures. 9-3 The physical representation of the actual population is the recorded value that represents the population. For example, if the auditors use a computer printout of recorded accounts payable from which to sample, they must attempt to determine that it properly includes all accounts payable. 9-4 All three of the methods of selecting items for examination (random number table selection, systematic selection, random number generator selection) will produce a random sample if properly applied....

Words: 9134 - Pages: 37

Premium Essay

...Sampling Designs • 1. Simple random sampling (SRS) Steps: – (1) Assign a single number to each element in the sampling frame. – (2) Use random numbers to select elements into the sample until the desired number of cases is obtained. • The method is not very different from winning a lottery. 2. Systematic Sampling • Steps: – (1) Calculate the sampling interval as the ratio between population size and sample size, I = N/n. – (2) Arrange all elements in the population in an order. – (3) Select a case in the first interval randomly. – (4) Select every ith case from this point. 2. Systematic Sampling (continued) I I 1st element, randomly chosen I I I I – Systematic Sampling is easier and simpler than SRS – The text warns of a danger to this method. What is it? 3. Stratified Sampling • Stratified sampling is more complicated than SRS. The advantage is the guaranteed representativeness in some important characteristics. • For example, say that we want to select a sample of 100 individuals. Sex ratio in the sample is up to chance if we do SRS. We can guarantee the 50-50 split if we do stratified sampling: Stratified Sampling, Graphic Representation Population SRS SRS Sample • Stratified sampling is often used to reduce the variability of a sample. Oversampling, Graphic Representation Population SRS SRS Sample • Increasing the representation of a group in a sample....

Words: 921 - Pages: 4

Free Essay

...Time sampling thus involves observing specified behavior of an individual and recording the presence or absence of this behavior during short time intervals of uniform length. The observer must prepare ahead of time, determining what specific behavior he/she will look for, what time interval he/she will use, and how he/she will record the presence or absence of the behavior. Specifics about Time Sampling The particular behaviors are usually determined by previous formal or informal observations made to discover...

Words: 959 - Pages: 4

Premium Essay

...http://www.rgs.org/OurWork/Schools/Fieldwork+and+local+learning/Fieldwork+techniques/Sampling+techniques.htm Two categories of sampling techniques, and variety of sampling techniques within each category Sampling techniques What is sampling? • A shortcut method for investigating a whole population • Data is gathered on a small part of the whole parent population or sampling frame, and used to inform what the whole picture is like Why sample? In reality there is simply not enough; time, energy, money, labour/man power, equipment, access to suitable sites to measure every single item or site within the parent population or whole sampling frame. Therefore an appropriate sampling strategy is adopted to obtain a representative, and statistically valid sample of the whole....

Words: 1366 - Pages: 6