Term
| Allowance for Sampling Risk |
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Definition
| The uncertainty that results from sampling; the difference between the expected mean of the population and the tolerable deviation or misstatement. |
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Term
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Definition
| The selection and evaluation of less than 100 percent of the population of audit relevance such that the auditor expects the items selected to be representative of the population and, thus, likely to provide a reasonable basis for conlcusions about the population. |
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Term
| Classical Variables Sampling |
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Definition
| The use of normal distribution theory to estimate the dollar amount of misstatement for a class of transactions or an account balance. |
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Term
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Definition
| A measure of sampling risk added and subtracted to the projected misstatement to form a confidence interval. |
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Term
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Definition
| The amount of misstatement that the auditor believes exists in the population. |
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Term
| Factual (or Known) Misstatement |
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Definition
| Detected misstatements about which there is no doubt. In a sampling context, these are the differences observed in the sample that are used to compute the projected misstatement. |
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Term
| Monetary-Unit Sampling (MUS) |
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Definition
| Attribute-sampling techniques used to estimate the dollar amount of misstatement for a class of transactions or an account balance. |
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Term
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Definition
| The risk that the auditor reaches an erroneous conclusion for any reason not related to sampling risk (e.g., judgment error, inappropriate procedures, failing to detect a misstatement when applying an audit procedure). |
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Term
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Definition
| Audit sampling that relies on the auditor's judgment to determine the sample size, select the sample, and/or evaluate the results for the purpose of reaching a conclusion about the population. |
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Term
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Definition
| The extrapolation of sample results to the population. The projected misstatement represents the auditor's "best estimate" of the likely misstatement in the sampling population. |
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Term
| Risk of Incorrect Acceptance |
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Definition
| The risk that the sample supports the conclusion that the recorded account balance is not materially misstated when it is materially misstated. |
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Term
| Risk of Incorrect Rejection |
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Definition
| The risk that the sample supports the conclusion that the recorded account balance is materially misstated when it is not materially misstated. |
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Term
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Definition
| The possibility that the sample drawn is not representative of the population and that, as a result, the auditor reaches an incorrect conclusion about the account balance or class of transactions based on the sample. |
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Term
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Definition
| The individual item constituting a population being sampled. |
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Term
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Definition
| Sampling that uses the laws of probability to select and evaluate the results of an audit sample, thereby permitting the auditor to quantify the sampling risk for the purpose of reaching a conclusion about the population. |
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Term
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Definition
| The amount of planning materiality that is allocated to a financial statement account. |
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Term
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Definition
| The total of the projected misstatement plus the allowance for sampling risk. |
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