AUD - sampling Flashcards
Probability-proportional-to-size (PPS) sampling:
This method involves selecting samples in a way that the probability of selecting any individual item is proportional to its recorded amount or size within the population. In accounts receivable, larger balances would have a higher probability of being included in the sample.
Variable sampling
variable sampling involves examining numerical data, such as dollar amounts, to estimate the value of a population. This technique is used to estimate the total value of a specific population, like accounts receivable, by examining a sample of individual balances and applying statistical methods to those values.
Stratified sampling
Stratified sampling involves dividing the population into different subgroups or strata and then randomly selecting samples from each stratum. This method ensures that different subgroups within the population are adequately represented in the sample.
Projected Misstatement
(recorded amount - audited value) = tainting factor
tainting factor x Sampling interval = projected misstatement
Upper Deviation Rate
This figure is determined using statistical methods and calculations. It represents the maximum deviation rate in the population, accounting for the sample size and the desired level of confidence. In this scenario, the upper deviation rate calculated is 3.6 percent.
Sample Deviation Rate
This is the actual deviation rate observed within the sample selected by the auditor. For instance, in this scenario, the sample deviation rate is 2 percent, indicating the proportion of errors found in the selected sample.
Allowance for Sampling Risk:
This is derived by subtracting the sample deviation rate from the upper deviation rate. It represents the portion of the upper deviation rate that is attributable to sampling variability.
In this case, 3.6% – 2% = 1.6%.
The tolerable deviation rate
