AUD Deck 7-Audit Sampling

Question 1

Sampling-

Answer 1

The selection and evaluation of less than 100 percent of the population of audit relevance such that the auditor expects the items selected to be representative of the population.

Question 2

There are two general approaches to sampling-(may depend on the auditor’s perceptions of cost/benefit tradeoffs)-

Answer 2

A)Nonstatistical sampling-(also called “judgmental” sampling.
B)Statistical-the benefits relate to objectivity.

Question 3

Attributes Sampling-

Answer 3

Sampling for purposes of deciding whether internal controls are working as designed (test of controls).

Question 4

8 Steps comprise an attributes sampling-

Answer 4

1) Identify the sampling objective
2) Define what constitutes an “occurrence”
3) Identify the relevant population
4) Determine the sampling method
5) determine the Sample size
6) select the sample
7) “evaluate” the sample results
8) document the auditor’s sampling procedures

Question 5

Variable Sampling-relies heavily on the classic “normal distribution.” This distribution is determined by two parameters-

Answer 5

1) the mean, related to central tendency

2) Variance (or its square root, standard deviation), related to dispersion or variability.