Refer to Exhibit and compare and contrast statistical sampling and nonstatistical sampling on the following dimensions: sample
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Refer to Exhibit and compare and contrast statistical sampling and nonstatistical sampling on the following dimensions: sample size determination, sample selection, evaluation, costs, andbenefits.
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Nanstatistical Sampling Statis tial Samping Sample size Sample size is determined by auditor Auditor judgment is quantified, and sample size is deter mined by probability theory judgment. Selection involves any method that the The sample must be randomly selected to give each unit in auditor believes is represen tative of the population an equal chance to be in the population. Judgment sampling can also be The population of interest can also be directed; for exam- directed at a portion of the population, ple, the transactions during the last 10 days of the year for example, all transactions during can be statistically sel the last five days of the year Evaluation is based on auditor judg Evaluation is based on statistical inference that is used to ment, and projections are based on assist auditor judgment sample results. Sample selection in the Evaluation Costs Selection costs are lower because Training costs are higher because knowledge of statistical audit judgment is required only to sampling methods and/or special computer sampling determine an appropriate sample size and evaluate the results This type of sampling does not provide This type of sampling requires the auditor to define an objective way to control and mea acoeptable risk in advance. sure Benefits This method can be based on the This method helps the puditor to design an efficient sampke auditor's prior expedations about re the suffidiency of the evidence, and evaluate the errors in the account results by providing an objective measure of sampling risk This method may take less time to plan, This method helps the auditor to gain efficiencies through select, and e the sample computerized selection and statistical evaluation and to defend sample inferences because they are based on sto- fistical theory This method helps the auditor to evaluate the sample providing a quantitative measure of the most likely a maximum failure rate of a control procedure that is being evaluated for effectiveness, the most likely and maximum amount of mis stotement in the recorded account balance or class of transactions, and the risk that the auditor moy make an incorrect judgment about the state of controls or corredness of account balances
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Auditing a risk based approach to conducting a quality audit
ISBN: 978-1133939153
9th edition
Authors: Karla Johnstone, Audrey Gramling, Larry Rittenberg
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