Audit Sampling Prepared by Murodullo Turdiyev. Group Hba-81i Learning Objectives

Sample size estimation for attribute sampling

Sample size estimation for attribute samples (alternative method)

• An alternative method is to determine sample size by reference to:
• Table 11.5 (p. 532), for where allowable risk of over-reliance (ARO) is 10% (90% confidence). This ARO is common in practice.
• Table 11.6 (p. 532), for where allowable risk of over-reliance is 5% (95% confidence).

Evaluation of attribute sample results

• Approach in practice is to use sample deviation rate (SDR) as best estimate of population deviation rate.
• For example, auditor selects 25 items, finds one error => SDR rate is 4%.
• Auditor compares with tolerable deviation rate (TDR). If SDR <= TDR, sample results support auditor’s planned reliance on IC.
• If SDR > TDR, sample results do not support auditor’s planned reliance on IC, auditor will revisit audit plan and reduce reliance on IC and increase substantive testing.

Used sources:

• Arens, Elder, Beasley. Auditing and assurance services book.
• Gey, Semnati. Auditing and assurance services book
• accaglobal.com (website)
• Accountingtools.com (website

Thanks for your attention!