Chapter 9 Flashcards
Allowance for Sampling Risk (ASR)
Also referred to as precision, an interval around the sample mean in which the true population characteristic is expected to lie
Attributes Sampling
A sampling plan enabling the auditors to estimate the rate of deviation (occurrence) in a population
Confidence Level
In attributes sampling, the complement of the risk of assessing control risk too low. In variables sampling, the complement of the risk of incorrect acceptance and thus if the risk of assessing control risk too low is .05, the confidence interval is .95
Deviation Rate
A defined rate of departure from prescribed controls also referred to as occurrence rate or exception rate
Difference estimation
A sampling plan that uses the difference between the audited (correct) values and book values of items in a sample to calculate the estimated total audited value of the population
Discovery Sampling
A sampling plan for locating at least 1 deviation, providing that the deviation occurs in the population with a specified frequency
Dual-purpose test
A test designed to test a control and to substantiate the dollar amount of an account using the sample
Expected population deviation rate
an advance estimate of a deviation rate, is necessary for determining the required sample size in an attributes sampling plan
Mean
the average item value computed by dividing total value by the number of items composing total value
mean-per-unit estimation
a classical variables sampling plan enabling the auditors to estimate the average dollar value of items in a population by determining the average value of items in a sample
nonsampling risk
the aspects of audit risk not due to sampling, normally relates to human error
physical representation of the population
the population from which the auditors sample
population
the entire field of items from which a sample might be drawn
probability-proportional-to-size (PPS) sampling
a variables estimation procedure that uses attributes theory to express a conclusion in monetary dollar amounts
projected misstatement
2an estimate of the most likely amount of monetary misstatement in a population
random selection
selecting items from a population in a manner in which every item has an equal chance of being included in the sample
ratio estimation
a sampling plan that uses the ratio of audited values to book values of items in the sample to calc the estimated total audited value of the population
reliability
the complement of the risk of incorrect acceptance
representative sample
a sample possessing essentially the same characteristics as the population from which it was draw
risk of assessing control risk too high
this risk is the possibility that the assessed level of control risk based on the sample is greater than the true operating effectiveness of the control
risk of assessing control risk too low
the most important risk is the possibility that the assessed level or control risk based on the sample is less than the true operating effectiveness of the controls
risk of incorrect acceptance
the risk that sample results will indicate that a population is not materially misstated when it is
risk of incorrect rejection
the risk that sample results will indicate that a population is materially misstated when it is not
sampling error
the difference between the actual rate or amount in the population and that of the sample
sampling risk
the risk that the auditors’ conclusion based on a sample might be different from the conclusion they would reach if the test were applied to the entire population
sequential sampling
a sampling plan in which the sample is selected in stages with the need for each subsequent stage being conditional on the results of the previous
standard deviation
a measure of variability or dispersion of item values within a population
stratification
dividing a population into two or more relatively homogeneous subgroups, increases the efficiency of most sampling plans by reducing the variability of items in each stratum, smaller sample sizes
systematic selection
the technique of selecting a sample by drawing every nth item in the population following one or more random starting points
tolerable deviation rate
the maximum population rate of deviations from a prescribed control that the auditor will tolerate without modifying the planned assessment of control risk
tolerable misstatement
an estimate of materiality for the particular audit test
variables sampling
sampling plans designed to estimate a numerical measurement of a population such as a dollar value
voucher
a document authorizing a cash disbursement
