Statistical Concepts

Question 1

Attribute sampling:
Discrete Variables

Answer 1

For audit: Each item in the pop is associated with a variable of interest. Example, invoice payments were or were not appropriately authorized

Question 2

Continuous Variables

Answer 2

Example: Monetary amounts of account receivables

Question 3

Measures of central tendency

Answer 3

Mean: average
Median: middle value (#s in numerical order)

Mode: most frequent reoccurring value

Question 4

Confidence (or precision) interval

Answer 4

For a given confidence level is the range around a sample value that is expected to contain the true population value

Eg (88% of the time) Conf level 95%, conf interval 6%, the auditor can be 95% confident that scores will be 82 to 94%

Question 5

Confidence level

Answer 5

% of times that a sample is expected to be representative of the population

“I am 95% that the population is representative of everyone here.”

Question 6

Statistical plan (8)

Answer 6

1. Determine the objective of the plan
2. Define the population
3. Determine acceptable levels of sampling risks
4. Calculate the sample size
5. Select the sampling approach
6. Take sample
7. Evaluate the sample results
8. Document the sampling procedures