This preview shows page 1. Sign up to view the full content.
Unformatted text preview: rticular
transactions or items may be misstated, he or she uses sampling procedures that
increase the likelihood of obtaining a sample that is representative of the population of transactions or account items. In such cases, the auditor uses the laws of
probability to make inferences about potential misstatements based on examining a sample of transactions or items.
The size of the auditor’s sample is a function of materiality and the desired
level of assurance for the account or assertion being examined. There is an inverse
relation between sample size and materiality, and a direct relation between sample size and desired level of assurance. For example, if an auditor assesses materiality for an account to be a small amount, a larger sample will be needed than
if materiality were a larger amount. This occurs because the auditor must gather
more evidence (a larger sample) to have a reasonable likelihood of detecting
smaller errors. You can think of materiality as the “ﬁneness of the auditor’s...
View Full Document
This note was uploaded on 12/08/2012 for the course ACCT 564 at Washington University in St. Louis.