Question

1. What is the difference between variables sampling and attribute sampling?

Why is attribute sampling usually appropriate for internal controls audits?

3- Give an example.

Why is variables sampling usually appropriate for substantive tests of financial statements accounts?

1. Give an example.

Answer 1

1. In attribute sampling, the result either conforms or does not conforms. It's a Yes or No answer.  Attribute sampling means that an item being sampled either will or won’t possess certain qualities, or attributes. Auditors typically choose attribute sampling to test internal control.  When an auditor use attribute sampling for checking internal control, the sampling unit is a single record or document. The auditor will go through these documents to see whether the client's internal control is working properly.

2. Suppose if a company has a policy that all purchases over $100 should be authorized by a purchasing order. Here the auditor can take a sample from invoices for purchases over $100. By scrutinizing all samples he can know how efficient is the internal control of the business.

3. Variable sampling is about checking “how much”, “how good”, or “how bad”. When attribute sampling just give you a Yes or No answer, Variable sampling measures the degree of conformity.