BAC401 - BAC 401 AUDIT SAMPLING INTRODUCTION Our question...

This preview shows page 1 - 2 out of 4 pages.

BAC 401: AUDIT SAMPLING INTRODUCTION Our question deals with audit sampling. With reference from ISA 530 audit sampling is the application of audit procedures to less than 100 of items within a population of audit relevance such that all sampling units have a chance of selection in order to provide the auditor with a reasonable basis on which to draw conclusions about the entire population. The purpose of ISA 530 is to establish standards and provide guidance on the use of audit sampling procedures and other means of selecting items for testing to gather audit evidence. i) The size of the sample selected by Sarah, is not representative. The number of items selected were 120 accounts out of 5350 which only represents 2% of the population. A good sample size should at least include 30% of the population selected. Sarah did not include accounts from government bodies as she could not rely on them for confirmation as she knew they would never reply and therefore she should have conducted a detailed check of the population due to unreliability of the source of evidence Sarah used a structured technique in her haphazard method of sampling and therefore she was biased as opposed to the requirements of using haphazard method under ISA 530 Sarah only represented 20% of the debtors in her assessment. This was not a true representation thus being highly immaterial as the value considered was so small and may affect the true and fair view of the accounts as a whole. ii) Stratified random sampling As an alternative Sarah should have used this method by dividing the population into sub- population strata or layers. High value debtors in the whole debtor population formed the small part and should be a 100% checked by Sarah and the remaining debtor population should be sampled, this will ensure that all identified characteristic are represented in the sample meeting
Image of page 1

Subscribe to view the full document.

Image of page 2
  • Fall '16
  • GEORGE THUO
  • Auditing, Sarah

{[ snackBarMessage ]}

What students are saying

  • Left Quote Icon

    As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

    Student Picture

    Kiran Temple University Fox School of Business ‘17, Course Hero Intern

  • Left Quote Icon

    I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern