Class_13_sampling_web

Class_13_sampling_web - Audit Sampling Learning Objectives...

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Audit Sampling Audit Sampling
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1. Develop a simple audit program for a test of a client’s internal control procedures. 2. Develop a simple audit program for an account balance, considering the influence of risk and tolerable misstatement 1. Explain the role of professional judgement in audit sampling decisions. 2. Distinguish audit sampling work from non-sampling work. 3. Compare and contrast statistical and non- statistical sampling. 4. Differentiate between sampling and non- sampling risk. Learning Objectives Learning Objectives
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Sampling Defined Sampling Defined Audit sampling is: the application of an audit procedure to less than 100 percent of the items within an account balance population or class of transactions. for the purpose of evaluating some characteristic of the balance or class.
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= x x audit risk inherent risk control risk detection risk Under- stand Of I/C Test of controls Analytical Procedure Test of Details of balances Sufficient & Appropriate audit evidence + + + = Involves Sampling Involves Sampling
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Sampling and the Extent of Sampling and the Extent of Auditing Auditing Three aspects of audit procedures are important: Nature The general technique to be used. (computation, observation, confirmation…) Extent The amount of work done when the procedures are performed. Sampling is concerned primarily with extent. Timing The point in the audit at which the procedures are to be performed.
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Representative sampling Representative sampling Definition: The characteristics in the sample of audit interest are approximately the same as those of the population
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Representative sampling Representative sampling A sample may not be representative due to: 1. Sampling risk : the risk that conclusions based on sample results will not be true of the population as a whole This risk can be reduced by increasing sample size 2. Non-sampling risk : Audit test do not uncover the exceptions in the sample due to failure to recognize them, or due to ineffective procedures Controlled by policies and procedures.
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TYPES OF AUDIT SAMPLING TYPES OF AUDIT SAMPLING Statistical sampling Uses the laws of probability to select and evaluate the results of an audit sample, thereby permitting the auditor to quantify the sampling risk Non-statistical sampling (judgmental) No quantification of sampling risk
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Statistical Sampling Statistical Sampling Auditors define statistical sampling as audit sampling that uses the laws of probability for selecting and evaluating a sample for the purpose of reaching a conclusion about the population. A statistical sample is selected at random. Statistical calculations are used to measure and express the results.
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Statistical Sampling Statistical Sampling Random sample: Each population item has an equal likelihood of being selected in the sample. A random sample is required for statistical
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Class_13_sampling_web - Audit Sampling Learning Objectives...

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