Question

In this chapter, focus on audit sampling concepts for Tests of Controls and Substantive Tests of Transactions, including the following:

statistical and non-statistical techniques

representative samples

consequence of exceptions discovered in sample testing and

attribute sampling and testing

Answer 1

There are two general approaches to audit sampling: nonstatistical and statistical. Both approaches require that the auditor use professional judgment in planning, performing, and evaluating a sample and in relating the evidential matter produced by the sample to other evidential matter when forming a conclusion about the related account balance or class of transactions. Either approach to audit sampling can provide sufficient evidential matter when applied properly. This section applies to both nonstatistical and statistical sampling.

Sample items should be selected in such a way that the sample can be expected to be representative of the population. Therefore, all items in the population should have an opportunity to be selected. For example, haphazard and random-based selection of items represents two means of obtaining such samples

when planning a particular audit sample for a test of control, the auditor should consider

the relationship of the sample to the objective of test of control.

the maximum rate of deviations from prescribed controls that would support his planned assess level of control risk.

the auditor's allowable risk of assessing control risk too low.

characteristics of the population, that is the item comprising the account balance or class of transaction of interest.