Module+E+Slides - Module E Sampling Professor Cannon Fall...

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Module E – Sampling Professor Cannon Fall 2016
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Opportunity!
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Quantitative Criteria: Absolute size Relative size Cumulative effects Qualitative Criteria Nature of the item or issue Circumstances Uncertainty Materiality Materiality – an amount that would influence the decisions of users (i.e., an amount that would make a difference). The emphasis is on the user, rather than management or the audit team. Materiality Criteria: Ultimately, materiality is a matter of professional judgment . 3-3
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Materiality Posting Threshold Performance Materiality
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“Application of an audit procedure to less than 100% of the items within an account balance or class of transactions for the purpose of evaluating some characteristic of the balance or class.” (AS 15, par. 28) What is Sampling?
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PCAOB Auditing Standard 15 What assertion(s) can’t be tested using sampling? Selecting Items for Testing
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Exact information not needed Large, homogeneous population Trades effectiveness for efficiency When is Sampling Used?
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Sampling Risk – r
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