Unformatted text preview: = 9.28 (from table 9.1)
Sample Size = 1,500,000 x 9.28 70,000 = 198.85 or 199 Calculate Sampling Interval
Calculate Sampling Interval The interval between successive sampling units selected for testing where systematic sample selection is being applied SI = PV / n Where SI = Sampling Interval
PV = Population Value n = Sample Size Calculate Sampling Interval
Calculate Sampling Interval From Example PV = $ 1,500,000 n = 199 SI = 1,500,000 / 199 SI = 7537.69 or $7538 Use a random number generator for start value between $1 & $ 7538 & then select every $7538 until sample size has been obtained Selecting The Sample Selecting The Sample Most common method is systematic selection
Pick a starting random number & then select (snag) ‘logical units’ by adding on the sampling interval Continue this process until you have selected the number of subsidiary accounts to fill the required sample size Substantive Testing on Substantive Testing on Selected Sample After selecting the sample, carry out the audit procedures From Example the auditor would send confirmation requests to those debtors who’s balance was selected as an item in the sample
Test of details of accounts receivables balance Document individual errors identified Assume that you detect four Assume that you detect four overstatement errors as follows:
Error No
1 Book Audit Value Value
10,000 6,000 2 20,000 18,000 3 6,000 4 35,000 28,000 0 MUST CALCULATE UEL
MUST CALCULATE UEL UEL IS THE UPPER ERROR LIMIT
THIS IS THE MAXIMUM AMOUNT OF OVERSTATEMENT ERROR, BASED ON THE SAMPLE RESULTS, THAT COULD EXIST IN THE POPULATION. STEPS IN CALCULATION STEPS IN CALCULATION OF UEL
1.
2.
3.
4.
5. CALCULATE PROJECTED POPULATION ERROR
CALCULATE BASIC PRECISION/ERROR
CALCULATE PRECISION GAP WIDENING
CALCULATE THE TOTAL UEL
APPLY DECISION RULES 1. Calculate Projected Error
1. Calculate Projected Error
Error No
1 Book Audit Tainting Sampling Projected Value Value
Interval
Error
10,000 6,000
NA
NA
4,000 2 20,000 18,000 3 6,000 4 35,000 28,000 0 N/A N/A 2,000 100% 7,538 7,538 NA N/A 7,000 Total...
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 Two '08
 Jenifer
 upper error limit

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