Audit Guide: Audit Sampling

Audit Guide: Audit Sampling



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Audit Guide: Audit Sampling by AICPA

Considered the industry-standard resource and updated as of March 1, 2014, the Audit Sampling Guide summarizes applicable requirements and practices, and delivers “how-to” advice to help auditors apply nonstatistical and statistical sampling.

The guide includes case studies illustrating the use of different sampling methods, including classical variables sampling and monetary unit sampling, in real world situations.

New in 2014, a detailed case study of the application of classical variables sampling with the use of software has been included as an appendix. The appendices also include sampling tables and similar tools, as well as other sampling considerations. Packed with information on sampling requirements and sampling methods, this Guide is an indispensable resource.

Product Details

ISBN-13: 9781945498565
Publisher: Wiley
Publication date: 10/02/2017
Pages: 208
Sales rank: 935,235
Product dimensions: 6.00(w) x 8.90(h) x 0.80(d)

About the Author

Founded in 1887, the American Institute of Certified Public Accountants (AICPA) represents the CPA and accounting profession nationally and globally regarding rule-making and standard-setting, and serves as an advocate before legislative bodies, public interest groups and other professional organizations. The AICPA develops standards for audits of private companies and other services by CPAs; provides educational guidance materials to its members; develops and grades the Uniform CPA Examination; and monitors and enforces compliance with the accounting profession's technical and ethical standards.
The AICPA's founding established accountancy as a profession distinguished by rigorous educational requirements, high professional standards, a strict code of professional ethics, a licensing status and a commitment to serving the public interest.

Table of Contents

Introduction 1-22

The Development of Audit Sampling 1-11

The Significance of Audit Sampling 12

The Purpose of This Guide 13-20

Audit Sampling Guidance for Compliance Audits 21-22

1 Characteristics of Audit Sampling 01-29

Audit Sampling Defined 04-05

Procedures That May Not Involve Audit Sampling 06-20

Inquiry and Observation 07

Analytical Procedures 08-09

Procedures Applied to Every Item in a Population 10-12

Some Tests of Controls May Not Involve Audit Sampling 13-14

Tests of Controls When Extrapolation Is Not Intended 15

Procedures That Do Not Evaluate Characteristics 16-17

Untested Balances 18

Tests of Automated IT Controls 19-20

Sampling and Nonsampling Audit Procedures Distinguished 21-25

Terminology Used in This Guide 26-29

Reliability or Confidence Level 27

Sampling Risk 28

Precision 29

2 The Audit Sampling Process 01-55

Purpose and Nature of Audit Sampling 02

How Audit Sampling Differs From Sampling in Other Professions 03-06

Evaluation of Audit Samples 07

Types of Audit Tests 08-14

Tests of Controls 09-10

Substantive Procedures 11

Dual-Purpose Tests 12-14

Risk 15-21

Sampling Risk 19

Nonsampling Risk 20-21

Nonstatistical and Statistical Sampling 22-29

Planning the Audit Sampling Procedures 30-34

Types of Statistical Sampling Plans 35-43

Attributes Sampling 35-37

Variables Sampling 38-41

Relating Balance Sheet and Income Statement Sampling 42-43

General Implementation Considerations 44-55

Continuing Professional Education 45-48

Sampling Guidelines 49

Use of Specialists 50-51

Supervision and Review 52-55

3 Nonstatistical and Statistical Audit Sampling in Tests of Controls 01-98

Determining the Test Objectives 02-05

Defining the Deviation Conditions 06

Defining the Population 07-10

Defining the Period Covered by the Test 11-21

Initial Testing 14

Estimating Population Characteristics 15-17

Considering the Completeness of the Population 18-21

Defining the Sampling Unit 22-24

The Role of Walk-throughs 25-28

Determining the Method of Selecting the Sample 29-36

Simple Random Sampling 30

Systematic Sampling 31-32

Haphazard Sampling 33-34

Block Sampling 35-36

Determining the Sample Size 37-65

Considering Sampling Risk in Assessing Controls Effectiveness 38-45

Considering Other Evidence in Determining Risk of Concluding Controls Are More Effective Than They Actually Are (Overreliance) and Tolerable Rate of Deviation 46

Considering the Risk of Concluding Controls Are More Effective Than They Actually Are (Overreliance) for Multiple Controls Addressing the Same Control Objective 47

Determining the Tolerable Rate of Deviation 48-54

Considering the Expected Population Deviation Rate 55-58

Considering the Effect of Population Size 59-61

Small Populations and Infrequently Operating Controls 62-63

Considering a Sequential or a Fixed Sample Size Approach 64

Developing Sample Size Guidelines 65

Performing the Sampling Plan 66-72

Voided Documents 67

Unused or Inapplicable Documents 68

Mistakes in Estimating Population Sequences 69-70

Stopping the Test Before Completion 71

Inability to Examine Selected Items 72

Evaluating the Sample Results 73-95

Calculating the Deviation Rate 74

Considering Sampling Risk 75-79

Considering the Qualitative Aspects of the Deviations 80-81

Extending the Sample When Control Deviations Are Found 82-84

Assessing the Potential Magnitude of a Control Deficiency 85-94

Reaching an Overall Conclusion 95

Documenting the Sampling Procedure 96-98

4 Nonstatistical and Statistical Audit Sampling for Substantive Tests of Details 01-108

Determining the Test Objectives 04-05

Defining the Population 06-12

Considering the Completeness of the Population 08-10

Identifying Individually Significant Items 11-12

Defining the Sampling Unit 13-14

Choosing an Audit Sampling Technique 15-16

Selecting the Sample 17-22

Determining the Sample Size 23-74

Considering Variation Within the Population 27-32

Determining the Acceptable Level of Risk 33-47

Considering Tolerable Misstatement 48-49

Performance Materiality and Tolerable Misstatement 50-59

Considering the Expected Amount of Misstatement 60-61

Considering the Effect of Population Size 62

Relating the Factors to Determine the Sample Size 63-74

Performing the Sampling Plan 75-76

Evaluating the Sample Results 77-104

Projecting the Misstatement to the Population 77-89

The Sufficiency of Sampling Evidence for Proposing Adjustments 90

Negative Confirmations 91

Interim Sample Results 92

Considering Sampling Risk at the Test Level 93-100

Misstatements Not Projected 101-104

Documenting the Sampling Procedure 105-108

5 Nonstatistical Sampling Case Study 01-16

Determining the Sample Size 08-11

Evaluating the Sample Results 12-16

6 Monetary Unit Sampling 01-63

Selecting a Statistical Approach 04-08

Advantages 05-06

Disadvantages 07-08

Defining the Sampling Unit 09-10

Selecting the Sample 11-19

Determining the Sample Size 20-31

Formula Method—No Misstatements Expected 23-25

Formula Method—Some Misstatements Expected 26-31

Evaluating the Sample Results 32-52

Sample Evaluation With 100 Percent Misstatements 35-41

Sample Evaluation With Less Than 100 Percent Misstatements 42-48

Quantitative Considerations 49-51

Qualitative Considerations 52

MUS Sampling Case Study 53-63

Selecting the Sample 56-58

Evaluating the Sample Results 59-63

7 Classical Variables Sampling 01-48

Selecting a Statistical Approach 03-06

Advantages 04

Disadvantages 05-06

Types of Classical Variables Sampling Techniques 07-10

Mean-Per-Unit Approach 08

Difference Approach 09

Ratio Approach 10

Choosing a Classical Variables Sampling Approach 11-15

The Ability to Design a Stratified Sample 12

The Expected Number of Differences Between the Audited and Recorded Amounts 13

Required Information 14-15

Determining the Sample Size 16-24

Considering Variation Within the Population 17-19

Calculating the Sample Size 20-24

Evaluating the Sample Results 25-39

Classical Variables Sampling Case Study 40-48


A Attributes Statistical Sampling Tables

B Sequential Sampling for Tests of Controls

C Monetary Unit Sampling Tables

D Ratio of Desired Allowance for Sampling Risk of Incorrect Rejection to Tolerable Misstatement

E Multilocation Sampling Considerations

F Case Study Using Software to Plan and Evaluate a Classical Variables Sample

G Glossary

H Overview of Statements on Quality Control Standards

I Schedule of Changes Made to the Text From the Previous Edition

Index of Pronouncements and Other Technical Guidance

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