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    Audit Sampling

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    BRIAN IVAN DHARMAWAN
    The document discusses audit sampling techniques, noting that audit sampling involves applying audit procedures to less than 100% of population items to make inferences about the entire population. It outlines statistical and non-statistical sampling approaches, with statistical sampling allowing auditors to quantify risk while non-statistical relies on judgmental sampling. The document also provides details on attribute sampling and its variations that auditors can use to test control procedures and compliance.

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    Audit Sampling

    Uploaded by

    BRIAN IVAN DHARMAWAN
    17 views10 pages
    The document discusses audit sampling techniques, noting that audit sampling involves applying audit procedures to less than 100% of population items to make inferences about the entire population. It outlines statistical and non-statistical sampling approaches, with statistical sampling allowing auditors to quantify risk while non-statistical relies on judgmental sampling. The document also provides details on attribute sampling and its variations that auditors can use to test control procedures and compliance.

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    The document discusses audit sampling techniques, noting that audit sampling involves applying audit procedures to less than 100% of population items to make inferences about the entire population. It outlines statistical and non-statistical sampling approaches, with statistical sampling allowing auditors to quantify risk while non-statistical relies on judgmental sampling. The document also provides details on attribute sampling and its variations that auditors can use to test control procedures and compliance.

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    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    17 views10 pages

    Audit Sampling

    Uploaded by

    BRIAN IVAN DHARMAWAN
    The document discusses audit sampling techniques, noting that audit sampling involves applying audit procedures to less than 100% of population items to make inferences about the entire population. It outlines statistical and non-statistical sampling approaches, with statistical sampling allowing auditors to quantify risk while non-statistical relies on judgmental sampling. The document also provides details on attribute sampling and its variations that auditors can use to test control procedures and compliance.

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    Fakultas Ekonomi dan Bisnis

    Universitas Padjadjaran

    Internal Auditing

    Chapter 11:
    Audit sampling
    Audit Sampling
    • Audit sampling is the application of an audit
    procedure to less than 100 percent of the item in
    a population for the purpose of drawing an
    inference about the entire population

    • Most common audit sampling:


    • Vouching
    • Tracing
    • Inquiry
    • observation
    Approaches to Audit Sampling

    1. Statistical Sampling
    • A tool that can help the internal auditor measure the
    sufficiency of evidence obtained and quantitatively evaluate
    the sampling results
    • Allowing the internal auditor to quantify, measure, and
    control sampling risk
    • Sample must be selected randomly and the sample results
    must be evaluated mathematically based on probability
    theory
    2. Non-statistical Sampling
    • Sample is determined merely based on judgment
    Sampling Risk
    • The risk that the internal auditor’s conclusion based
    on sample testing may be different than the
    conclusion reached if the audit procedure was
    applied to all items in the population

    • Sampling risk varies inversely with sample size


    • Sample size large >>> Sampling risk low
    • Sample size small >>> Sampling risk high
    Sampling Risk: Test of Controls

    1. Type II Risk / Beta Risk


    • The risk of assessing control risk too low
    • The risk that the internal auditor will incorrectly conclude that
    a specified control is more effective than it really is

    2. Type I Risk / Alfa Risk


    • The risk of assessing control risk too High
    • The risk that the internal auditor will incorrectly conclude that
    a specified control is less effective than it really is
    Control Risk
    • Control risk is the risk that controls fail to reduce
    controllable risk to an acceptable level
    • Controls are implemented specifically to reduce
    controllable risk
    • The risk remaining after controls have been
    implemented is Residual Risk
    • Controls are ineffective If residual risk exceeds
    management’s risk tolerance
    Statistical Audit Sampling:
    Attribute Sampling Approaches

    • Attribute sampling is statistical sampling approach based


    on binomial distribution theory, that enable the user to
    reach a conclusion about population in terms of rate of
    occurrence
    • The binomial distribution is a distribution of all possible
    samples for which each item in the population has one of
    two possible states
    • The internal auditor test the rate of deviation from a
    prescribed control to determine whether the occurrence
    rate is acceptable
    Attribute Sampling Approaches: Variations

    • Stratified Attribute Sampling


    When different controls are applied to different levels of transactions,
    the different levels of transactions should be considered separately as
    different populations
    • Stop or Go Sampling
    • Most appropriate when very low deviation rates are expected
    • If a sufficiently low number of deviations are found in the initial
    sample, the internal auditor stops sampling and formulate the
    conclusion
    • Discovery Sampling
    • the sample is designed to be large enough to detect deviation
    • Most commonly to test for fraud
    Step by Step Attribute Sampling
    1. Identify a specific internal control objective
    2. Devine control deviation
    3. Devine the population and sampling unit
    4. Determine appropriate values of the parameters affecting
    sample size
    5. Determine the appropriate sample size
    6. Randomly select the sample
    7. Audit the sample items selected and count the number of
    deviations
    8. Determine the achieved upper deviation limit
    9. Evaluate the sample results
    Non-Statistical Audit Sampling

    • Representative of the population


    • Haphazard sampling ( non random but
    representative)
    • Sample is strictly determined based on judgment
    • Simple to do
    • Efficiency in terms of cost and time

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