AUDIT SAMPLING TESTS OF CONTROL

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CHAPTER 12

• AUDIT SAMPLING - TESTS OF CONTROL

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SAMPLING TERMS

• SAMPLING
• APPLICATION OF AN AUDITING PROCEDURE TO LESS THAN
  100 PERCENT OF A POPULATION
• SAMPLING RISK
• RISK THAT SAMPLE IS NOT REPRESENTATIVE OF THE
  POPULATION
• NONSAMPLING RISK
• ALL OTHER RISKS

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STATISTICAL SAMPLING

• STATISTICAL SAMPLING
• USES LAWS OF PROBABILITY TO QUANTIFY AND CONTROL
  FOR SAMPLING RISK
• PLAN SAMPLE
• SELECT SAMPLE
• EVALUATE RESULTS
• NONSTATISTICAL SAMPLING
• USES AUDITOR JUDGMENT TO ACCOMPLISH STEPS ABOVE

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SELECTING SAMPLE ITEMS

• NONPROBABILISTIC SAMPLE SELECTION
• DIRECTED ITEM SELECTION
• MOST LIKELY TO CONTAIN ERRORS
• ITEMS CONTAINING CHARACTERISTICS
• LARGE DOLLAR ITEMS
• BLOCK SAMPLING
• HAPHAZARD SELECTION

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• PROBABILISTIC SAMPLING
• SIMPLE (UNRESTRICTED) RANDOM SELECTION
• EVERY POSSIBLE COMBINATION OF ITEMS IN POPULATION
  HAS AN EQUAL CHANCE OF BEING SELECTED
• LOTTERY
• RANDOM NUMBER TABLE
• WITH OR WITHOUT REPLACEMENT
• SYSTEMATIC SELECTION
• INTERVAL SAMPLING WITH RANDOM START
• POPULATION/SAMPLE SIZE INTERVAL SIZE
• RANDOM START WITHIN INTERVAL (RS)
• SELECTED ITEMS RS INTERVALS

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SAMPLING FOR EXCEPTION RATES

• ATTRIBUTE SAMPLING
• DEVIATIONS FROM CONTROL
• DEVIATION RATE
• SAMPLING RISK
• RISK OF ASSESSING CONTROL RISK TOO LOW
• RISK OF ASSESSING CONTROL ISK TOO HIGH

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STATISTICAL SAMPLING

• SAMPLING PLAN
• OBJECTIVE OF TEST
• DECIDE IF SAMPLING APPLIES
• DEFINE ATTRIBUTES AND DEVIATIONS
• DEFINE POPULATION
• DEFINE SAMPLING UNIT
• DETERMINE TOLERABLE EXCEPTION RATE
• ACCEPTABLE RISK OF ASSESSING CR TOO LOW
• ESTIMATE POPULATION EXCEPTION RATE
• DETERMINE SAMPLE SIZE
• SELECT SAMPLE
• PERFORM AUDIT PROCEDURES
• EVALUATE SAMPLING RESULTS

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NONSTATISTICAL SAMPLING

• SAMPLING PLAN
• DETERMINE SAMPLE SIZE
• POPULATION SIZE
• TOLERABLE EXCEPTION RATE
• ACCEPTABLE RISK OF ASSESSING CR TOO LOW
• EXPECTED POPULATION EXCEPTION RATE
• GENERALIZE TO POPULATION
• SAMPLE EXCEPTION RATE
• JUDGMENTAL ALLOWANCE FOR SAMPLING RISK
• ANALYZE EXCEPTIONS