Chapter 17 Flashcards
The risk that the auditor is willing to take of accepting a balance as correct when the true misstatement in the balance exceeds tolerable misstatements
Acceptable Risk of Incorrect Acceptance (ARIA)
The risk that the auditor is willing to take of rejecting a balance as incorrect when it is not misstated by a material
Acceptable Risk of Incorrect Rejection (ARIR)
The minimum allowance for sampling risk inherent in the sample for MUS; it is equal to the allowance for sampling risk when no misstatements are found in the sample
Basic Precision
A method of variables sampling where the auditor estimates the population misstatement by multiplying the average misstatement in the sample by the total number of population items and also calculates sampling risk
Difference Estimation
A method of variables sampling where the auditor estimates the audited value of a population by multiplying the average audited value of the sample by the population size and also calculates sampling risk
Mean-per-unit Estimation
An estimate of the largest likely overstatement in a population at a given ARIA, using monetary unit sampling
Misstatement Bound
A statistical sampling method that provides misstatement bonds expressed in monetary amounts
Monetary Unit Sampling (MUS)
A method of projecting from the sample to the population to estimate the population misstatement by assuming that misstatements in the unaudited population are proportional to the misstatements found in the sample
Point Estimate
Sample selection of individual dollars in a population by the use of random or systematic sample selection
Probability Proportional to Size Sample Selection (PPS)
A method of variables sampling where the auditor estimates the population misstatement by multiplying the portion of sample dollars misstated by the total recorded population book value and also calculates sampling risk
Ratio Estimation
Statistical conclusions that the auditor draws from sample results based on knowledge of sampling distributions
Statistical Inferences
A method of sampling where all the elements in the total population are divided into two or more subpopulations that are independently tested and statistically measured
Stratified Sampling
The application of performance materiality to a particular sample procedure
Tolerable Misstatement
Sampling techniques for tests of details of balances that use statistical inference process
Variables Sampling
The differences between Test of
Detail Balances and Test of Controls for planning the sample are…..
Test of Detail Balances will: Define a misstatement Specify tolerable misstatement Specify acceptable risk of incorrect acceptance Estimate misstatements in the population
Test of Detail Balances will:Define attributes and exception conditions
Specify the tolerable exception rate
Specify acceptable risk of over-reliance
Estimate the population exception rate