Additionally auditors must assess the control

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Unformatted text preview: dditionally, auditors must assess the control environment at entities with multiple locations. If controls at the different locations are significantly different, each location must be considered a separate population. The auditor must document the “sampling unit,” which is the individual item subject to sampling in the population (i.e., reconciliations. loan files, cash disbursements. cash receipts, etc.). When selecting the sample of individual items, auditors must ensure that the sample is representative of the universe for the compliance requirement being tested. The auditor should also clearly define what would be considered an exception. A single exception would indicate noncompliance, subject to further determination of materiality necessary to determine the required method of reporting. A. Determining the Sample Size. To determine attribute testing sample sizes, the auditor needs to determine the value for three inputs: desired confidence level, tolerable exception rate, and expected exception rate. The compliance table sample size is based on the following expectations. 3/2011 Page 1 2000.04 REV-2 CHG-10 1. Desired Confidence. Auditors should obtain a high degree of assurance by using a confidence level of 90. 95. or 99 percent. 2. Tolerable Exception Rate. A 5-10 percent exception rate is acceptable. 3...
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