3.
Determine sample size, using the following inputs.
•
Determine the desired confidence level.
•
Determine the tolerable deviation rate.
•
Determine the expected population deviation rate.
•
Determine the population size (if < 500).
4.
Select sample items.
5.
Perform the audit procedures—understand and analyze any deviations observed.
6.
Calculate the sample deviation and computed upper deviation rates.
7.
Draw final conclusions.
b.
The advantages of using a statistical sampling methodology are that it helps the auditor
(1) design an efficient sample, (2) measure the sufficiency of the evidence obtained,
and (3) quantify sampling risk.
By using a statistical sampling methodology, the
auditor can limit sampling risk to an acceptable level.
8-5

Chapter 08 - Audit Sampling: An Overview and Application to Tests Of Controls
8-25
The sample size for each control procedure is:
Parameters
Control Procedure
1
2
3
4
Risk of incorrect acceptance
5%
5%
10%
10%
Tolerable deviation rate
4%
5%
7%
8%
Expected population deviation rate
1%
2%
3%
4%
Sample size (using tables)
156
181
94
98
Sample size (using ACL)
158
184
96
100
8-26
The
computed upper deviation rate and the auditor’s decision for each control
procedure are:
Results Using Tables
Control Procedure
1
2
3
4
Number of deviations
0
5
4
3
Sample size
156
181
94
98
Sample deviation rate
0.0
2.8
4.3
3.1
Computed upper deviation rate
2.0
6.9
8.7
7.3
Auditor’s decision
Supports
Does not
support
Does not
support
Supports
Results Using ACL
Control Procedure
1
2
3
4
Number of deviations
0
5
4
3
Sample size
158
184
96
100
Sample deviation rate
0.0
2.7
4.2
3.0
Computed upper deviation rate
1.9
5.7
8.3
6.7
Auditor’s decision
Supports
Does not
support
Does not
support
Supports
8-6

Chapter 08 - Audit Sampling: An Overview and Application to Tests Of Controls
8-27
The sample size for each control procedure is:
Parameters
Control Procedure
1
2
3
4
Risk of incorrect acceptance
5%
5%
10%
10%
Tolerable deviation rate
6%
7%
4%
3%
Expected population deviation rate
2%
2%
1%
0%
Sample size using tables
127
88
96
76
Sample size using ACL
130
90
98
77
8-28
The computed upper deviation rate and the auditor’s decision for each control procedure
are:
Results using Tables
Control Procedure
1
2
3
4
Number of deviations
4
2
2
0
Sample size
127
88
96
76
Sample deviation rate
3.1
2.3
2.1
0.0
Computed upper deviation rate
7.2
7.7*
5.9
3.3*
Auditor’s decision
Does not
support
Does
Support
Does not
support
Does
Support
* It appears that the computed upper deviation rate exceeds the tolerable deviation rate for
both procedure 2 and 4. However, these results are obtained because the evaluation tables
do not include evaluations for sample sizes of 88 and 76, and when rounded down to
sample sizes of 80 and 70, respectively, the computed upper deviation rate of 7.7% and
3.3% exceed the tolerable deviation rate. In reality, because a statistically derived sample
size was determined in problem 8-27 and because the allowed number of deviations was
found (see the number in parentheses in tables 8-5 and 8-6), the auditor is guaranteed that
the results are acceptable. Note that when using ACL, rounding is not a potential source
for auditor error.

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