Term
|
Definition
| objective is to make a statement about a population of interest by examining a subset of that population |
|
|
Term
|
Definition
|
|
Term
1. evaluation of internal control
2. conducting substantive procedures |
|
Definition
| two major stages in the audit examining where sampling is used |
|
|
Term
| to determine whether the client's account balances or classes of transactions are recorded and presented in conformity with generally accepted accounting principles |
|
Definition
| purpose of conducting substantive procedures |
|
|
Term
| to determine whether important control policies and procedures are functioning as intended to prevent and detect material financial material misstatements |
|
Definition
| purpose of evaluating internal control |
|
|
Term
|
Definition
| what error type are auditors most concerned with? |
|
|
Term
| incorrectly accepting a hypothesis |
|
Definition
| what is a type 2 beta error |
|
|
Term
| accounting distributions are generally more skewed than distributions of other data (more low dollar items or items without errors than high dollar items or items with errors) |
|
Definition
|
|
Term
1. the need for exact information is not important
2. the number of items comprising the population is large |
|
Definition
| sampling is typically used when the question of interest has the following two characteristics |
|
|
Term
| sampling trades effectiveness for EFFICIENCY |
|
Definition
|
|
Term
|
Definition
| possibility that the decision made based on the sample differs from the conclusion that would have been made if the entire population had been examined |
|
|
Term
|
Definition
| caused when the sample drawn from the population does not appropriately represent that opulation; when decisions made based ont he sample differ from decisions that would be made if the entire population were examined |
|
|
Term
|
Definition
| likelihood of sampling error |
|
|
Term
| non representative sample |
|
Definition
| a sample that differs substantially on one or more key characteristics of interest from the population from which the sample is drawn |
|
|
Term
1. determining an appropriate sample size
2. ensuring that all items have an equal opportunity to be selected
3. evaluating sample results to control sampling risk |
|
Definition
| three major steps that can control sampling risk in the sampling process |
|
|
Term
|
Definition
| represents the probability that an incorrect conclusion will be reached due to reasons unrelated to the nature of the sample |
|
|
Term
non sampling risk
(caused by evaluator error) |
|
Definition
| arises because of audit errors in judgment or execution |
|
|
Term
| sampling plans (statistical sampling plans) |
|
Definition
| allow risk to be measured and controlled to acceptable levels |
|
|
Term
| statistical sampling methods |
|
Definition
| enable the audit team to make quantitative statements about ht results and to measure the sufficiency of evidence gathered and evaluate the results in such a way to control sampling risk |
|
|
Term
| generally accepted auditing standards do not require use of statistical sampling |
|
Definition
|
|
Term
planning
performing
evaluating
see word doc notes |
|
Definition
|
|
Term
1.determine the objective of sampling
2. define the characteristic of interest
3. define the population |
|
Definition
| components of the planning step of sampling |
|
|
Term
4. determine the sample size
5. select the sample items
6. measure the sample items |
|
Definition
| components of the performing step of sampling |
|
|
Term
| statistical sampling plans allow determining a sample size that measures and controls exposure to sampling risk |
|
Definition
|
|
Term
1. unrestricted random selection
2. systematic random selection
3. haphazard selecion
4. block selection |
|
Definition
| four methods used to select a sample |
|
|
Term
| unrestricted random selection/random selection |
|
Definition
| items are selected from a population so that each item has an equal chance of being selected |
|
|
Term
| unrestricted random selection |
|
Definition
| can only be used when items in the population are numbered or can easily be assigned a number |
|
|
Term
inventory/AP
AP/cash
Prpds/cash
exp/prds
ppe/np
np/cash
depr exp/ad |
|
Definition
| typical entries for the acquisition and expenditures cycle |
|
|
Term
inventory/AP
AP/cASH
Prpds/cash
exp/prds
ppe/np
np/cash
deprexp/adleteness: every liability and expense that shouldve been recorded is recorded (search for unrecorded liab)
4. valuation or allocation: our liab and related purchases are valued at the correct amount |
|
Definition
| typical entries for the acquisition and expenditures cycle |
|
|
Term
1. physically purchasing the goods/services - includes the authorization to make the purchase
2. physically receive the good/service
3. recording the asset/expense and related liability
4. paying the liability (AP, NP,etc) |
|
Definition
| basic activities for acquisition and expenditure cycle |
|
|
Term
purchase requisition
purchase order (an approved requisition)
receiving report (includes bill of lading)
vendor's invoice
voucher package
invoice
check/pmt |
|
Definition
| major documents of the acq/exp cycle |
|
|
Term
| unrestricted random selection (random selection) |
|
Definition
| items are selected from a population so that each item has an equal chance of being selected |
|
|
Term
1. a series of random numbers is identified by either a random number table or computer program
2. the random numbers are matched to numbered items in the corresponding population |
|
Definition
| two step procedures for the use of random selection |
|
|
Term
| systematic random selection |
|
Definition
| the individual randomly selects a starting point from within the population and examines every nth item thereafter, where n is determine based on the number of items in the population and the necessary sample size |
|
|
Term
|
Definition
| ensures that all items have an equal probability of selection while providing a more efficient method of selecting items than unrestricted random selection |
|
|
Term
1. determine the necessary sampling interval
2. select a random starting point from within the population (a number equal to or less than the sampling interval) and select the item in the population corresponding to this number
3. add the sampling interval to the random starting point. the item in the population corresponding to this number is the next item selected.
4. add the sampling interval to the total from above. the item in the population corresponding to this number will be the next item selected
5. repeat step 4 until the number of items equal to the necessary sample size is selected |
|
Definition
| basic steps used in systematic selection |
|
|
Term
|
Definition
| identifies the frequency with which items are selected within the population in a systematic selection; determined by dividing the number of items in a population by the necessary sample size |
|
|
Term
|
Definition
| items are selected in an unstructured manner but without any intentional bias |
|
|
Term
| can't duplicate (whereas in random selection or systematic selection you can) |
|
Definition
| limitation of haphazard selection |
|
|
Term
|
Definition
| involves selecting a series of contiguous or adjacent items from the population |
|
|
Term
| random or systematic selection used with statistical sampling |
|
Definition
|
|
Term
1. provide a reasonable likelihood of obtaining a representative sample
2. allow the probability of obtaining sample items to be determined
3. allow the sample selection process to be replicated |
|
Definition
| 3 reasons why random or systematic selection used with statistical sampling? |
|
|
Term
| precision/allowance for sampling risk |
|
Definition
| the numeric distance from the estimated population value i which the true but unknown population value may lie with a given probability |
|
|
Term
| reliability/confidence level |
|
Definition
| the likelihood of achieving a given level of precision |
|
|
Term
|
Definition
| a range around the sample estimate that has a certain likelihood (equal to reliability) of including the true population value |
|
|
Term
|
Definition
| application of an audit procedure to less than 100% of the items within an account balance or class of transactions for the prupose of evaluating some characteristic of the blaance or class |
|
|
Term
| controls that are tested once or infrequently when effective information technology general controls are present, segregation of duties or other controls that don't provide documentary evidence of performance, certain controls related to the control environment when the audit team is not interested in estimating a rate of deviation (mgmt integrity etc) |
|
Definition
| controls whose evaluation would not involve sampling |
|
|
Term
1. less than 100% of the items composing the population must be examined
2. the results of the sample must be projected to the population being examined
3. the projected results must be compared to some existing criterion |
|
Definition
| 3 conditions that must be met for an application to be classified as audit sampling |
|
|
Term
|
Definition
| the rate at which internal control activities are not functioning |
|
|
Term
| tolerable rate of deviation |
|
Definition
| some permissible rate by the audit team regarding the rate at which internal control activities are not functioning |
|
|
Term
|
Definition
| use of sampling in evaluating intern control activities |
|
|
Term
|
Definition
| the permissible amount of dollar misstatement in the account balance or class of transactions |
|
|
Term
|
Definition
| the use of sampling in determining whether the client's account balances are fairly stated according to GAAP |
|
|
Term
|
Definition
| used when the audit team examinees a subset of items within a population to determine the extent to which a particular attribute exists within that population |
|
|
Term
|
Definition
| the risk that auditors will unknowingly fail to modify their opinion on financial statements that are materially misstated |
|
|
Term
|
Definition
| what kind of sampling is used in assessing control risk |
|
|
Term
1. identify key controls to be relied upon
2. make preliminary/planned assessment of control risk
3. perform tests of controls on key controls*
4. assess effectiveness of key controls
5. confirm or reassess level of control risk* |
|
Definition
| the general procedure used by the audit team to assess control risk, and when to use attributes sampling during it |
|
|
Term
| provide a final assessment of control risk |
|
Definition
| ultimate objective of attributes sampling |
|
|
Term
| Tolerable Rate of Deviation/TRB |
|
Definition
| maximum rate of deviation that could exist before auditors would reduce reliance on a control in evaluating the effectiveness of client's controls |
|
|
Term
| upper limit rate of deviation, ULRD |
|
Definition
| provides a conservative measure of the sample rate of deviation hat allows the audit team to control exposure to sampling risk |
|
|
Term
| if ULRD is less than or equal to the tolerable rate of deviation, auditors rely on controls as planned and maintain their assessment of control risk at planned levels |
|
Definition
|
|
Term
| risk of under reliance; risk of assessing control risk too high |
|
Definition
| the auditors' sample results in the decision to reduce their reliance eon internal control, which results in higher assessments of control risk |
|
|
Term
| risk of over reliance/risk of assessing control risk too low |
|
Definition
| inappropriately relying on internal control and maintaining the assessment of control risk at lower levels |
|
|
Term
|
Definition
| used to examine a population when auditors want to estimate the amount/value of some characteristic of that population |
|
|
Term
|
Definition
| what type of sampling do auditors use when performing substantive procedures to evaluate the fairness of an account balance or class of transactions |
|
|
Term
|
Definition
| the risk that the auditors' substantive procedures (both tests of details and analytical procedures) will fail to detect a material misstatement that exists within an account balance |
|
|
Term
| the extent of substantive procedures is most closely associated with the use of variables sampling |
|
Definition
|
|
Term
| audited value/audited balance |
|
Definition
| the true/correct amount at which the item should be recorded when performing variables sampling |
|
|
Term
classical variables sampling
monetary unit (MUS) sampling |
|
Definition
| two statistical sampling approaches with variables sampling |
|
|
Term
| classical variables sampling |
|
Definition
| uses the laws of probability and the central limit theorem to estimate either the amount of misstatement in the account balance or the audited value |
|
|
Term
| monetary unit sampling MUS |
|
Definition
| provides auditors an estimate of the amount of misstatement in the account balance; selects larger transactions |
|
|
Term
| sample estimate of misstatement |
|
Definition
| the difference between the recorded account balance and the audited account balance |
|
|
Term
|
Definition
| the amount of misstatement that auditors are willing to allow in an account without concluding that it is materially misstated |
|
|
Term
| upper limit on misstatement ULM |
|
Definition
| adds precision to the sample estimate of misstatement |
|
|
Term
risk of over reliance
risk of under reliance |
|
Definition
| risks in attribute sampling |
|
|
Term
risk of incorrect acceptance
risk of incorrect rejection |
|
Definition
| risks of variables sampling |
|
|
Term
|
Definition
| when auditors examine documents for both attributes and monetary misstatements |
|
|
Term
1. population size
2. the expected rate of deviation/misstatement
3. tolerate rate of deviation/misstatement
4. auditors' acceptable exposure to sampling risk |
|
Definition
| four key factors affecting the auditors' determination of sample size |
|
|
Term
| population size has direct relationship with sample size |
|
Definition
|
|
Term
| expected rate of deviation has direct relationship with sample size |
|
Definition
|
|
Term
| tolerable rate of deviation has inverse relationship with sample size |
|
Definition
|
|
Term
|
Definition
| what kind of relationship does sampling risk have with sample size |
|
|
Term
|
Definition
| what kind of relationship does population variability have with sample size |
|
|
Term
|
Definition
| population variability/standard error of the mean |
|
|
Term
| statistical sampling methods |
|
Definition
| control the individual's exposure to sampling risk by selecting a sufficient sample size and evaluating sample results in such a way to control sampling risk |
|
|
Term
|
Definition
| a sampling plan that does not apply the laws of probability to select sample items for examination and evaluate sample results; doesn't allow an individual to control exposure to sampling risk |
|
|
Term
| reliability/confidence level |
|
Definition
| the likelihood of achieving a given level of precision |
|
|
Term
|
Definition
| the rate at which internal control activities are not functioning as intended |
|
|
Term
| standard deviation/standard error of the mean |
|
Definition
| a measure of the variability of the population calculated by summing the squared differences between each item in the population and the population mean |
|
|
Term
|
Definition
| used to determine the extent to which some attributes exists within a population of interest |
|
|
Term
|
Definition
| two important assertions about events in the revenue cycle |
|
|
Term
|
Definition
| employed to verify the audit team's assessment of control risk |
|
|
Term
occurrence
completeness
cutoff
accuracy
classification |
|
Definition
| main assertions in the revenue cycle |
|
|
Term
| deviation (error, occurrence or exception) |
|
Definition
| refers to instances in which the client and/or its personnel do not follow prescribed controls; when controls are not functioning as intended |
|
|
Term
|
Definition
| the set of all items about which a conclusion is desired |
|
|
Term
| physical representation of the population |
|
Definition
| the frame of reference that audit team uses in selecting the sample; also referred to as the source of the sample |
|
|
Term
sample risk/risk of over reliance
tolerable rate of deviation
expected population deviation rte
population size |
|
Definition
| four main factors that influence the sample size in an attributes sampling application |
|
|
Term
| tolerate rate of deviation TRD |
|
Definition
| maximum rate of deviations permissible by the audit team without modifying the planned assessed level of control risk |
|
|
Term
| expected population deviation rate |
|
Definition
| some level of exceptions/deviations that occurs in the client's internal control policies |
|
|
Term
| allowance for sampling risk/precision |
|
Definition
| the proximity of a sample estimate to the maximum rate of deviation at a given confidence level |
|
|
Term
identify the objective of sampling
define a deviation condition
define the population |
|
Definition
| planning the sample steps |
|
|
Term
determine sample size
select the sample
measure the sample items |
|
Definition
| basics of the sampling plan |
|
|
Term
| sample rate of deviation SRD |
|
Definition
| represents the rate of deviations from key controls noted by the audit team in their sample |
|
|
Term
| divide the number of deviations noted int the sample by the sample size |
|
Definition
| how to calculate SRD sample rate of deviation |
|
|
Term
| upper limit rate of deviation ULRD |
|
Definition
| provides a conservative estimate of he population rate of deviation that allows the audit team to control exposure to sampling risk to acceptable levels |
|
|
Term
| allowance for sampling risk |
|
Definition
|
|
Term
|
Definition
| the audit team selects and evaluates a single sample |
|
|
Term
|
Definition
| stop and go sampling; provides flexibility and efficiency |
|
|
Term
| sequential sampling methods |
|
Definition
| provide the audit team the opportunity to draw conclusions using a smaller sample than a traditional fixed sampling plan |
|
|
Term
|
Definition
| form of attributes sampling that is used when deviations from controls are very critical yet are expected to occur at a relatively low rate |
|
|
Term
|
Definition
| used to evaluate operating effectiveness of internal control |
|
|
Term
|
Definition
| the probability that an entity's controls will fail to prevent or detect material misstatements due to errors or frauds that would otherwise have entered the system |
|
|
Term
|
Definition
a process, effected by an entity's board of directors, mgmt, and other personnel, designed to provide reasonable assurance regarding the achievement of objectives in the following three categories:
1. reliability of financial reporting
2. effectiveness and efficiency of operations
3. compliance with applicable laws and regulations |
|
|
Term
1. financial reporting
2. operations
3. compliance |
|
Definition
| internal control is designed to achieve mgmt objectives in three categories: |
|
|
Term
control environment
risk assessment
control activities
monitoring
information and communication |
|
Definition
|
|
Term
integrity and ethical values
board of directors
mgmt's philosophy/operating style
financial reporting competencies
organizational structure
authority/responsibility
human resources |
|
Definition
| general principles of an effective internal control environment |
|
|
Term
|
Definition
| subcommittee of the board of directors that is generally composed of three to six outside members of the organization's board of directors |
|
|
Term
|
Definition
| factors, events, and conditions that can prevent the organization from achieving its business objectives, including effective financial reporting |
|
|
Term
|
Definition
| specific actions taken by a client's mgmt and employees to help ensure that mgmt directives are carried out |
|
|
Term
integration with risk assessment
selection and development of control activities
policies and procedures
information technology |
|
Definition
| principles of control activities |
|
|
Term
|
Definition
| procedures that prevent misstatements before they occur |
|
|
Term
|
Definition
| procedures that detect misstatements after they occur |
|
|
Term
performance reviews
separation of duties
phsyical controls
information processing controls |
|
Definition
|
|
Term
authorization
recording
custody of assets
reconciliation |
|
Definition
| four types of functional responsibilities that should be separated |
|
|
Term
| information technology general controls (ITGC) |
|
Definition
| apply to all applications systems and help ensure their continued proper operations |
|
|
Term
general controls
application controls |
|
Definition
| two categories of computerized information processing controls |
|
|
Term
| information technology application controls (ITAC) |
|
Definition
| include computerized steps within the application software and related manual procedures to control the information processing |
|
|
Term
|
Definition
| weakest point in computerized systems |
|
|
Term
|
Definition
| designed to provide reasonable assurance that data received for processing by the information processing department have been authorized properly and converted into machine sensitive form and that information has not been lost, suppressed, added, duplicated, or improperly changed |
|
|
Term
|
Definition
| refer to error-condition check routines written into the computer program; designed to provide reasonable assurance that information processing has been performed as intended without any omission or double counting of transactions |
|
|
Term
|
Definition
| the final check o the accuracy of the results of computerized processing |
|
|
Term
financial reporting information
internal control information
internal communication
external communication |
|
Definition
| principles of information and communication controls for financial reporting |
|
|
Term
| entity level controls ELCs |
|
Definition
| controls that are pervasive to the financial statements taken as a whole |
|
|
Term
| transaction level controls |
|
Definition
| controls that pertain to specific classes of transactions, account balances, and disclosures |
|
|
Term
|
Definition
| determines whether the controls over financial reporting, if operating effectively, would be expected to prevent or detect errors for fraud that could result in a material misstatement int eh financial statements |
|
|
Term
|
Definition
| consists of a combination of inquiry of personnel, observation of entity operations, and document examination while tracing one or more transactions through the audit trail from initiation of the transaction to its inclusion int eh financial statements |
|
|
Term
|
Definition
| whether the control is operating as designed and whether the person performing the control possesses the necessary authority and qualifications to perform the control effectively |
|
|
Term
| conduct an interview with managers with an internal control questionnaire |
|
Definition
| most efficient means to begin gathering evidence about an entity's internal control |
|
|
Term
|
Definition
| audit documentation that describes the environmental elements, the accounting system, and the control activities in an entity's internal control |
|
|
Term
|
Definition
| connects the control evaluation to subsequent audit procedures |
|
|
Term
inquiry
observation
document examination
re performance |
|
Definition
| four methods of testing controls |
|
|
Term
|
Definition
| most effective test of controls |
|
|
Term
vouching=occurrence
tracing=completeness |
|
Definition
|
|
Term
|
Definition
| detail audit and analytical procedures designed to detect material misstatements in account balances and footnote disclosures |
|
|
Term
| internal control deficiency |
|
Definition
| exists when the deign or operation of a control doesn't allow the entity's mgmt or employees to detect or prevent misstatements in a timely fashion |
|
|
Term
|
Definition
| an internal control deficiency that is less sever than a material weakness but important enough to merit attention by those charged with governance |
|
|
Term
|
Definition
| an internal controls deficiency that results in a reasonable possibility that a material misstatement would not be prevented or detected on a timely basis |
|
|
Term
unqualified
disclaimer of opinion (cannot perform all of the procedures necessary)
adverse opinion: one or more material weaknesses exist |
|
Definition
| types of opinions for the effectiveness of internal control |
|
|
Term
|
Definition
| consists of knowingly making material misrepresentations of fact with the intent of inducing someone to believe the falsehood and act upon it and, thus, suffer a loss or damage |
|
|
Term
| employee fraud (misappropriation assets or defalcation) |
|
Definition
| the use of fraudulent means to take money or other property from an employer |
|
|
Term
|
Definition
| a type of fraud involving employees or non employees wrongfully taking money or property entrusted to their care, custody and control, often accompanied by false accounting entries and other forms of lying and cover up |
|
|
Term
|
Definition
|
|
Term
motive
opportunity
rationalization |
|
Definition
| the probability of fraud is a function of three factors: |
|
|
Term
motivation
opportunity
rationalization |
|
Definition
| the three aspects of the fraud triangle, where when one or two of the factors are present the probability of fraud increases |
|
|
Term
|
Definition
| some type of pressure experienced by a person and believed unsharable with friends and confidants |
|
|
Term
|
Definition
| primary target of employee fraud |
|
|
Term
1. receiving an processing customer orders
2. delivering goods/services to customers
3. billing customers and accounting for AR
4. collecting/depositing cash rcvd from customers
5. reconciling bank statements |
|
Definition
| basic activities int he revenue and collection cycle |
|
|
Term
1. purchasing goods and services
2. paying the bills |
|
Definition
| basic acquisition and expenditure activities |
|
|
Term
|
Definition
| arrangement in which payments re remitted by customers to an external location and a fiduciary opens the box, lists the receipts, deposits the money, and sends the remittance advices to the company |
|
|
Term
|
Definition
| the theft of a payment and the application of subsequent pmts to cover the theft |
|
|
Term
|
Definition
| an insurance policy that covers most kinds of cash embezzlement losses |
|
|
Term
| occurrence, accuracy, completeness, classification, cutoff |
|
Definition
| important control objectives over cash transactions |
|
|
Term
| obtain entity prepared bank reconciliation and audit it |
|
Definition
| the first procedure in an audit of cash |
|
|
Term
|
Definition
| source for validating the bank reconciliation items; a complete bank statement including all paid checks and deposit slips |
|
|
Term
| schedule of interbank transfers |
|
Definition
| an analysis used to determine whether transfers of cash from one bank to another were recorded properly |
|
|
Term
|
Definition
| the deliberate floating of funds between two or more bank accounts in order to make it appear that more cash is present than is really the case |
|
|
Term
|
Definition
| a reconciliation in which the bank balance, the bank report of cash depositied, and the bank report of cash paid are all reconciled to the corresponding records maintained in the entity's general ledger, cash receipts journal, and cash disbursements journal |
|
|
Term
|
Definition
| specific responses to fraud risk factors |
|
|
Term
count and recount petty cash on same day
examine endorsements on canceled checks
review customers' checks
use marked coins and currency
analyze the mix of cash and checks in deposits
measure deposit lag time
document examination
inquiry
covert surveillance
horizontal and vertical analysis
reasonableness tests |
|
Definition
| some extended procedures for detecting employee fraud schemes involving cash |
|
|
Term
1. fraudulent act
2. conversion of the money or property to the fraudsters use
3. the cover up |
|
Definition
| three phases of employee fraud |
|
|
Term
|
Definition
| the risk that auditors will issue an unqualified opinion on financial statements that contain a material misstatement |
|
|
Term
|
Definition
| recording revenues in the general ledger (often done fraudulently by schemes such as bill and hold |
|
|
Term
| persuasive evidence of an arrangement exists, deliver has occurred or services have been rendered, the seller's price to the buyer is fixed or determinable, and collectibility is reasonably assured |
|
Definition
| revenue is realized/realizable and earned when: |
|
|
Term
|
Definition
| form that is signed by the carrier to verify the goods are shipped |
|
|
Term
|
Definition
| describes the goods being shipped and is often included with the shipment |
|
|
Term
|
Definition
| the bill sent to the customer that indicates the amount due |
|
|
Term
|
Definition
| a schedule that lists each individual receivable and indicates whether it is current or past due and how long it is past due; the total should equal the AR general ledger balance |
|
|
Term
vouching
tracing
observing
scanning
recalculating |
|
Definition
| actions in tests of controls |
|
|
Term
| confirmations provide evidence of existence and to a limited extent, valuation of accounts and notes receivable |
|
Definition
|
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Term
| positive and engative confirmations |
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Definition
| two widely used confirmation forms |
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| asks the customer to respond whether the balance is correct or incorrect |
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| asks for a response only if something is wrong with the balance; lack of response to this form is considered evidence that the account is fairly stated |
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| most common type of confirmation |
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| the audit procedures to gather a=evidence on the assertions in account balances |
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| confirmations yield evidence about existence and valuation |
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| a fraudulent financial reporting activity whereby a company recognized a sale even though it does not ship the merchandise to the customer, but instead holds it in its own warehouse |
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| an audit procedure that simultaneously serves the substantive purpose (obtain direct evidence abou the dollar amounts in account balances) and the test of controls purpose (obtain evidence about the company's performance of its own control activities |
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| a document included with a shipment that shows the description and quantity of the goods being shipped |
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| tests that ensure sales are recorded in the proper period: generally, when they are shipped: and that the cost of sales is recorded and removed from inventory |
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| The ICQ is a device for collecting evidence in the form of answers to control questions |
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Definition
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| The bridge working paper connects control evaluation findings of strengths to test of control activities for testing the strengths, and control evaluation findings of weakness to suggestions for substantive procedures. |
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| involve non dollar totals. |
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| differs from statistical sampling in that it does not allow measurement of sampling risk. Therefore, samples may be selected using nonrandom techniques such as haphazard or block sampling. |
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Term
| because nonrandom techniques can be used, non-statistical sampling is often faster and easier to perform. |
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Definition
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Definition
| represents a range around the sample estimate that has a certain likelihood (equal to reliability) of including the true population value |
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| is the likelihood that the precision interval contains the true (but unknown) population value. |
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| the average of the observations in the sample. |
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| the sample estimate plus and minus the precision |
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| c. If you use statistical sampling, your sampling plan would consider the acceptable level of sampling risk in determining the appropriate sample size and evaluating sample results. Nonstatistical sampling methods would not consider sampling risk in determining sample size or evaluating sample results. |
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| d. The primary advantage of statistical sampling is that it allows you to explicitly control your exposure to sampling risk. The primary disadvantage of using statistical sampling is that it is typically more complex and time-consuming than non-statistical sampling. |
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| A. Precision Interval = Sample Estimate + or - Precision |
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Definition
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Term
| Sampling Risk = 1 - Reliability |
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Definition
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| d. If sampling risk is increased, the reliability (or confidence) decreases, since reliability equals one minus sampling risk |
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