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ACCT 404
MODULE E
Overview of Sampling
LEARNING OBJECTIVES
Review
Checkpoints
Exercises, Problems,
and Simulations
1.
Understand the basic principles of sampling,
including the differences between statistical and
nonstatistical sampling and sampling and
nonsampling risk.
1, 2, 3, 4, 5, 6
51, 52, 53, 54, 55
(parts a – c), 56, 63
(parts a – c), 66, 67,
71 (parts a – e)
2.
Understand the basic steps and procedures used
in conducting a sampling plan.
7, 8, 9, 10, 11, 12,
13
55 (part d), 57, 58,
59, 60, 61, 62, 63
(parts d – g), 64, 65,
68, 70
3.
Identify the two situations in which sampling is
used in an audit examination.
14, 15, 16, 17, 18,
19, 20, 21
71
4.
Understand how the basic steps and procedures
used in a sampling plan apply to an audit
examination.
22, 23, 24
69,
72, 73, 74
SOLUTIONS FOR REVIEW CHECKPOINTS
E.1
Sampling can be used by the auditor during the study and evaluation of a client’s internal control and the
substantive procedures.
E.2
Sampling risk is the possibility that the decision made based on the sample differs from the decision that
would have been made if the entire population had been examined, a sampling error. Sampling error arises
when the sample drawn from the population does not appropriately represent that population.
E.3
Nonsampling risk represents the probability that an incorrect conclusion is reached because of reasons
unrelated to the nature of the sample, a nonsampling error. Nonsampling error arises because of errors in
judgment or execution of the sampling plan.
E.4
Sampling risk is controlled by the auditor by (1) determining an appropriate sample size and (2) evaluating
sample results to consider the possibility that the sample does not appropriately represent the population.
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E.5
Statistical sampling plans apply the laws of probability to select sample items for examination and evaluate
sample results. Statistical sampling plans differ from nonstatistical sampling plans in terms of the methods
used to determine the appropriate sample size and evaluate the sample results. In a statistical sampling plan,
these methods control exposure to sampling risk, whereas they do not do so in a nonstatistical sampling
plan.
E.6
Either statistical sampling or nonstatistical sampling can be used under generally accepted auditing
standards.
Nonstatistical sampling should not be used solely to reduce sample size.
E.7
Determine the objective of sampling
2.
Define the characteristic of interest
3.
Define the population
4.
Determine the sample size
5.
Select sample items
6.
Measure sample items
7.
Evaluate the sample results
E.8
It is important to carefully define the population of interest, since the results of the entire sampling
application will be based on the population from which the sample is drawn.
E.9
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 Spring '11
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