Prepared by Murodullo Turdiyev. Group Hba-81i Learning Objectives Definition and features - Audit sampling: the application of an audit procedure to less than 100% of the items within a population to obtain audit evidence about particular characteristics of the population Audit sampling is important because it provides information on:
- How many items to examine
- Which items to select
- How sample results are evaluated and extrapolated to the population in order to tell us something about the population (e.g. level of misstatement)
- Sampling risk: the probability that the auditor has reached an incorrect conclusion because audit sampling was used rather than 100% examination (i.e. correctly chosen sample was not representative of the population).
- Non-sampling risk: arises from factors, other than sample size, that cause an auditor to reach an incorrect conclusion, such as the possiblility that:
- The auditor will fail to recognise misstatements included in examined items
- The auditor will therefore apply a procedure that is not effective in achieving a specific objective.
Characteristic of interest - - When sampling, the auditor identifies a particular characteristic of the population to focus upon.
- For tests of control, the characteristic of interest is the rate of deviation from an internal control policy or procedure. - For substantive tests, the characteristic of interest is monetary misstatement in the balance. Various means of gathering audit evidence - 100% examination: this is not a sampling method
- Selecting specific items: e.g. high value or high risk — this is not a sampling method. Items selected will not necessarily be representative of the population
- Audit sampling
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