Escolar Documentos
Profissional Documentos
Cultura Documentos
AT.114-Audit Sampling
L. R. CABARLES
1st Sem. SY 2013-14
LECTURE NOTES
Means of Selecting Items for Testing
When designing tests of controls and tests of details, the
auditors means of selecting items for testing are:
Audit sampling.
These approaches are described in further detail below.
Selecting All Items
100% examination is unlikely in the case of tests of
controls; however, it is more common for tests of details.
100% examination may be appropriate when, for example:
Page 1 of 8
Beta Risk
(Type II
Misstatement)
Assessing control
risk too low
more effective than
they actually are
Overreliance
Incorrect Acceptance
does not exist when
in fact it does
Effectiveness
Proper planning
AT.114
The table below summarizes the comparison between the two sampling
Statistical Sampling
Basic concepts
approaches:
Non-statistical Sampling
A sampling approach that does not have
characteristics of statistical sampling (i.e., no
random selection of sample items and does not
apply laws of probability)
Cannot measure sampling risk quantitatively,
only based on the auditors judgment.
Advantages
More defendable
Free from bias
Easy to apply
Less costly
Disadvantages
Page 2 of 8
www.prtc.com.ph
P1-203
Example of a potential
reciprocal population
Subsequent disbursements
Shipping documents
Factor
Tolerable misstatement
Allowable risk of incorrect
acceptance/Sampling risk (beta risk)
Expected amount of misstatement
Assessed level of control risk
Population size
Page 3 of 8
Relationship
Inverse
Inverse
Direct
Direct
Negligible effect
b.
Effectiveness
Direct
Negligible effect
Relationship
Inverse
Inverse
c.
www.prtc.com.ph
P1-203
Page 4 of 8
www.prtc.com.ph
P1-203
Performed in stages
Disadvantages of PPS
MULTIPLE CHOICE
Selecting Items for Testing
1. Evaluate whether each of the following statements
qualifies as sampling:
1.1 Test performed on 100% of the items within a
population
1.2 Selecting items over a certain amount
1.3 Selecting items for the total population on the
basis that was expected to be representative
a. 1.1, 1.2, 1.3 qualify
b. 1.1 and 1.2 qualify; 1.3 does not qualify
c. 1.1 and 1.2 do not qualify; 1.3 qualifies
d. 1.1, 1.2, 1.3 do not qualify
Basic Concepts of Audit Sampling
2. Audit sampling, which involves the application of audit
procedures to less than 100 percent of items within a
population of audit relevance such that all sampling
Page 5 of 8
www.prtc.com.ph
P1-203
b.
Incorrect acceptance
d.
Under reliance
b.
c.
d.
Page 6 of 8
b.
c.
d.
test of controls is
of errors in the
of errors in the
of errors in the
of errors in the
www.prtc.com.ph
P1-203
a
Increase
b
Increase
c
Increase
Increase
Decrease
Decrease
Decrease
Increase
Decrease
Increase
Decrease
Increase
Decrease
Increase
Decrease
d
Decrease
Page 7 of 8
b.
Variables sampling.
d.
PPS sampling.
www.prtc.com.ph
P1-203
Page 8 of 8
b.
P6,000,000
d.
P6,025,000
- end of AT.114 -
www.prtc.com.ph
P1-203