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
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Summary Audit sampling is necessary and helps improve an audit engagement because examining all items are rather very timely, requires more effort, and of course, at higher cost. Audit risks such as inherent, control and detection risk are first assessed when doing audit sampling. Low control risk means auditors rely extensively on the entity's internal control, and vice versa. The process for determining risks and gathering evidences to provide reasonable assurance are done through other audit procedures
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Variables Sampling 689 I have edited a portion of Module G from your textbook so that it more closely follows my lecture. I need to acknowledge that this is not my original work and much of it is taken word for word from the 2nd edition of Auditing & Assurance Services by Louwers, Ramsay, Sinason and Strawser. Tad Miller Classical Variables Sampling LEARNING OBJECTIVE Understand the basic process underlying classical variables sampling in an audit examination. When performing substantive
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Solutions for Chapter 8 Tools to Gather Audit Evidence Review Questions: 8-1. The three main tools the auditor might use in gathering and evaluating audit evidence are: • Audit sampling • Generalized Audit Software • Analytical procedures 8-2. Non-sampling risk is the risk that the auditor makes an improper assessment of inherent and/or control risk or did not apply audit procedures carefully. It can be minimized through: (1) Good hiring, training and supervision
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selecting items for testing (True/False). (10%) False 2. Name the two types of audit sampling. (30%) Statistical and Non-Statistical 3. List the three types of statistical sampling. (30%) Simple random, stratified, and cluster sampling 4. Name three non-statistical sample selection methods. (30%) Block sampling, haphazard sampling, random number sampling 10/10 = 100% Week 4 Multiple Choice 1. In an audit sampling application, an auditor a) Performs procedures on all items in a balance
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(2) 15-11 Sampling error is an inherent part of sampling that results from testing less than the entire population. Sampling error simply means that the sample is not perfectly representative of the entire population. Nonsampling error occurs when audit tests do not uncover errors that exist in the sample. Nonsampling error can result from: 1. The auditor's failure to recognize exceptions, or 2. Inappropriate or ineffective audit procedures. There are two ways to reduce sampling risk: 1
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things that could result from this weakness. We can conclude that there may be discrepancies in items shipped and items billed to customers. As well because of a lack of numerical reference, sampling can have a lack of effectiveness. () 2 & 3. (Refer to Attached Excel Document) 4. Upon analyzing the sampling results, it could be said that when it comes to cases of missing bills of lading there is significant evidence provided to conclude that because of the outlying beyond the allowable deviation
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addition, there is now an allowance for 2 deviations within the set. [b] Do you agree with Darrell’s conclusions with respect to these first two controls? If not, why not? In evaluating Darrell’s conclusions, you may wish to refer to the attribute sampling evaluation table available in Appendix A. b. Darrell’s conclusions regarding the first two controls are not entirely accurate. Because he did not test using the right sample size, his conclusions cannot be relied upon. For the first control
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correctness, reliability and systematic records offices seem to prefer random sampling which is an exceptional technique that helps decrease the connected expenses and normally optimize employees time use in the process. Moreover, if the number sampled well represents the client population this will supply applicable and dependable conclusions without the need to test the entire population (Johnson, 2004). Choosing samples for the audit should be drawn at random to guarantee that each client has the same
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Chapter 9.2: Sampling Proportions Chapter 9.2 Homework Name_____________________ Done on Time:____/5 Completed:____/5 1. A USA Today poll asked a random sample of 1012 U.S. adults what they do with milk in the bowl after they have eaten the cereal. Of the respondents, 67% said that they drink it. Suppose that 70% of U.S. adults actually drink the cereal milk. (a) Find the mean and standard deviation of the proportion p of the sample who say they drink the cereal milk. The mean is
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