Term
|
Definition
| the application of audit procedures to less than 100 percent of the items in a population of audit relevance selected in such a way that the auditor expects the sample to be representative of the population and thus likely to provide a reasonable basis for conclusions about the population. |
|
|
Term
|
Definition
| it is not economical for auditors to test 100 percent of the population |
|
|
Term
|
Definition
| used to estimate the proportion of a population that possesses a certain characteristic |
|
|
Term
|
Definition
| the probability that the true but unknown measure of the characteristic of interest is within specified limits |
|
|
Term
| allowance for sampling risk |
|
Definition
| the difference between the expected and the tolerable deviation rate |
|
|
Term
|
Definition
| the possibility that the sample drawn is not representative of the population and leads to an incorrect conclusion |
|
|
Term
|
Definition
| all or a subset of the items that constitute the class of transactions |
|
|
Term
|
Definition
| relies on the auditor's judgment to determine sample size and evaluate the results |
|
|
Term
|
Definition
| the maximum deviation rate from a prescribed control that an auditor is willing to accept |
|
|
Term
| 3 advantages of statistical sampling |
|
Definition
- helps the auditor design an efficient sample
- helps the auditor measure the sufficiency of evidence obtained
- helps the auditor quantify sampling risk
|
|
|
Term
| 3 disadvantages of statistical sampling |
|
Definition
additional costs of:
- training auditors in the proper use of sampling techniques
- designing and conducting the sampling application
- lack of consistent application across audit teams due to complexity of the underlying concepts
|
|
|
Term
| 3 general steps in attribute sampling |
|
Definition
- Planning
- Performance
- Evaluation
|
|
|
Term
| all 7 steps of attribute sampling (OPS I AD C) |
|
Definition
Planning
- Determine test OBJECTIVES
- Define the POPULATION characteristics (sampling population, unit, and control deviation conditions)
- Determine the sample SIZE, using the following inputs: (desired confidence level or risk of incorrect acceptance, tolerable deviation rate, expected population deviation rate)
- Select sample ITEMS
- Perform the AUDIT procedures (understand and analyze any deviations observed)
- Calculate the sample DEVIATION rate and the computed upper deviation rate
- Draw final CONCLUSIONS
|
|
|
Term
| which type of sampling is used for tests of controls? |
|
Definition
|
|
Term
| why use attribute sampling for tests of controls? |
|
Definition
| because the auditor normally attempts to determine the operating effectiveness of a control in terms of deviations from a prescribed internal control |
|
|
Term
|
Definition
| Risk of incorrect rejection - relates to the efficiency of the audit |
|
|
Term
|
Definition
| Risk of incorrect acceptance. Relates to the effectiveness of the audit. |
|
|
Term
| MIRAD COPS, which commonly use audit sampling? |
|
Definition
Math Recalculation - Yes
Inquiry - No
Reperformance - Yes
Analytical Procedures - No
Documents, Inspection of - Yes
Confirmation - Yes
Observation - No
Physical Assets, Inspection of - Yes
Scanning - No |
|
|
Term
| Benchmarks for assessed importance of a control & tolerable deviation rates |
|
Definition
Importance High - Deviation rate 3-5%
Importance Moderate - Deviation rate 6-10% |
|
|
