Ch13LC - CHAPTER 13 AUDIT SAMPLING Learning Check 13-1. No....

Info iconThis preview shows pages 1–3. Sign up to view the full content.

View Full Document Right Arrow Icon
C HAPTER 13 A UDIT S AMPLING Learning Check 13-1. No. Audit sampling is applicable to both tests of controls and substantive tests. However, it is not equally applicable to all auditing procedures. For example, it is widely used in vouching, confirming, and tracing, but it is ordinarily not used in inquiring, observing, and analytical procedures. 13-2. a. Sampling risk relates to the possibility that a properly drawn sample may not be representative of the population from which it is drawn. Nonsampling risk refers to the portion of audit risk that is not due to examining only a portion of the data. b. There are two types of sampling risks for tests of controls and two for substantive tests. The types of sampling risk and their potential effects on the audit are: Tests of controls: The risk of assessing control risk too low is the risk that the assessed level of control risk based on the sample supports the planned assessed level of control risk when the true operating effectiveness of the control structure policy or procedure, if known, would not be considered adequate to support the planned assessed level. The risk of assessing control risk too high is the risk that the assessed level of control risk based on the sample does not support the planned assessed level of control risk when the true operating effectiveness of the control structure policy or procedure, if known, would be considered adequate to support the planned assessed level. Substantive tests: The risk of incorrect acceptance is the risk that the sample supports the conclusion that the recorded account balance is not materially misstated when it is materially misstated. The risk of incorrect rejection is the risk that the sample supports the conclusion that the recorded account balance is materially misstated when it is not materially misstated. The risk of assessing control risk too low and the risk of incorrect acceptance relate to audit effectiveness. The risk of assessing control risk too high and the risk of incorrect rejection relate to the efficiency of the audit. 13-3. a. Both nonstatistical and statistical sampling (1) require the exercise of judgment, (2) can provide sufficient evidential matter required by the third
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
standard of field work, and (3) are subject to some sampling and nonsampling risk. The critical difference is that the laws of probability are used to measure and control sampling risk in statistical sampling. b. Statistical sampling benefits the auditor in (1) designing an efficient sample, (2) measuring the sufficiency of the evidence obtained, (3) evaluating sample results, and (4) quantifying and controlling sampling risk. 13-4. a. The types of statistical sampling techniques used in auditing are attribute sampling and variables sampling. b.
Background image of page 2
Image of page 3
This is the end of the preview. Sign up to access the rest of the document.

Page1 / 12

Ch13LC - CHAPTER 13 AUDIT SAMPLING Learning Check 13-1. No....

This preview shows document pages 1 - 3. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online