Lecture6 - Week 6: Sales and Collection Cycle and Sampling...

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Unformatted text preview: Week 6: Sales and Collection Cycle and Sampling - Lecture Sales and Collection Cycle and Sampling Introduction | Sampling Risk | Statistical vs. Non- statistical Sampling | Monetary Unit Sampling | Revenue Recognition Auditors are concerned with performing a sufficient audit in order to be able to have a reasonable basis for rendering an opinion on the client's financial statements. Therefore, auditors employ sampling techniques to help them determine where to most beneficially allocate their audit resources for a proper result. Generally accepted auditing standards approve of both statistical and non-statistical sampling. Statistical sampling occurs when the auditor specifies the sampling risks he or she is willing to accept and calculates the sample size that will provide the desired degree of reliability. The difficulty is determining how much risk the auditor is willing to accept — more risk, less sampling; less risk, more sampling. A mistake many auditors fall into is substituting mathematical analysis and results for professional judgment. In non-statistical sampling, the auditor's sample size is not determined mathematically. Instead, the auditors will use their professional judgment to determine the sample size and analyze the results of the sample taken....
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This note was uploaded on 08/27/2011 for the course AC555 AC555 taught by Professor Tarbet during the Spring '10 term at Keller Graduate School of Management.

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Lecture6 - Week 6: Sales and Collection Cycle and Sampling...

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