AUDIT SAMPLING FOR TESTS OF CONTROLS AND SUBSTANTIVE TESTS OF TRANSACTIONS 14 IF YOUR ARE NOT GOING TO BELIEVE IT DONT USE IT @2000 Prentice hall. Inc
Arens, Loebbecke; Auditing, 8/E ©2000 Prentice Hall, Inc. 14 AUDIT SAMPLING FOR TESTS OF CONTROLS AND SUBSTANTIVE TESTS OF TRANSACTIONS IF YOUR ARE NOT GOING TO BELIEVE IT, DON’T USE IT
CIisampl Representative samples Characteristics in the sample of audit interest are approximately the same as those of the population. Nonsampling risk (nonsampling error) occurs when audit tests do not uncover existing exceptions in the sample. 2 Sampling risk(sampling error) is an inherent part of sampling that results from testing less than the entire population. @2000 Prentice hall. Inc
Arens, Loebbecke; Auditing, 8/E ©2000 Prentice Hall, Inc. Representative Samples Characteristics in the sample of audit interest are approximately the same as those of the population. 1. Nonsampling risk (nonsampling error) occurs when audit tests do not uncover existing exceptions in the sample. 2. Sampling risk (sampling error) is an inherent part of sampling that results from testing less than the entire population
Probabilistic versus Nonprobabilistic Sample selection Nonprobabilistic (judgmental sample selection: 1. Directed sample selection 2. Block sample selection 3. Haphazard sample selection Probabilistic sample selection: 1. Simple random sample selection 2. Systematic sample selection 3. Stratified sample selection Arens. Loebbecke: Auditing, &/E @2000 Prentice hall. Inc
Arens, Loebbecke; Auditing, 8/E ©2000 Prentice Hall, Inc. Probabilistic Versus Nonprobabilistic Sample Selection Nonprobabilistic (judgmental) sample selection: 1. Directed sample selection 2. Block sample selection 3. Haphazard sample selection Probabilistic sample selection: 1. Simple random sample selection 2. Systematic sample selection 3. Stratified sample selection
irected Sample selection Selection of items in the sample based on some judgmental criteria established by the auditor Items Most Likely to Contain Misstatements Items Containing Selected Population Characteristics Large dollar Coverage @2000 Prentice hall. Inc
Arens, Loebbecke; Auditing, 8/E ©2000 Prentice Hall, Inc. Directed Sample Selection: Selection of items in the sample based on some judgmental criteria established by the auditor. Items Most Likely to Contain Misstatements Items Containing Selected Population Characteristics Large Dollar Coverage
Block Sample selections Selection of several items in sequence Haphazard sample selection Selection of items without any bias on the part of the auditor. @2000 Prentice hall. Inc
Arens, Loebbecke; Auditing, 8/E ©2000 Prentice Hall, Inc. Block Sample Selection: Selection of several items in sequence. Haphazard Sample Selection: Selection of items without any bias on the part of the auditor