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    Audit-Sampling

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    karryl barnuevo
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    Audit-Sampling

    Uploaded by

    karryl barnuevo
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    Summary

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    © © All Rights Reserved

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    Summary

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    3 views2 pages

    Audit-Sampling

    Uploaded by

    karryl barnuevo
    Summary

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
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    Audit Sampling:

    Audit sampling is the process by which an auditor selects and tests a representative portion of a
    population (such as transactions or balances) to draw conclusions about the entire population. Since it’s
    often impractical to test every item in a population due to time, cost, or resource constraints, audit
    sampling helps auditors make informed judgments about the financial statements based on a subset of
    data.

    Steps in Audit Sampling:

    The steps in audit sampling generally include the following:

    1. Define the Objective of the Sampling:

    o The auditor needs to identify the purpose of the sampling. For example, it could be to
    test the accuracy of account balances or the effectiveness of internal controls. The
    objective helps guide the selection and evaluation of the sample.

    2. Define the Population:

    o The population refers to the entire set of items that the auditor intends to draw the
    sample from (e.g., all sales transactions, all invoices, or all inventory items). The
    population should be clearly defined so the auditor can ensure that the sample selected
    is representative.

    3. Determine the Sample Size:

    o The sample size is based on factors such as:

     The desired level of assurance (confidence level)

     The acceptable level of misstatement or error (tolerable error)

     The variability or risk within the population

     The auditor's professional judgment

    o Larger sample sizes typically increase the reliability of the results but also require more
    time and resources.

    4. Select the Sample:

    o There are various methods for selecting a sample, such as:

     Random Sampling: Items are selected randomly, ensuring each item has an
    equal chance of being chosen.

     Systematic Sampling: Items are selected using a fixed interval (e.g., every 10th
    transaction).

     Stratified Sampling: The population is divided into subgroups or strata, and


    samples are selected from each subgroup.
     Judgmental Sampling: The auditor uses professional judgment to select specific
    items, often based on perceived risks or significance.

    5. Perform the Audit Procedures on the Sample:

    o Once the sample is selected, the auditor performs the audit procedures on the sample
    items. These procedures may involve inspecting documents, verifying transactions,
    performing recalculations, or testing controls.

    6. Evaluate the Results of the Sample:

    o After testing the sample, the auditor assesses the findings and draws conclusions about
    the entire population. This step involves:

     Evaluating whether any misstatements or errors found in the sample are


    significant enough to affect the overall financial statements.

     Using statistical methods (if applicable) to project the findings from the sample
    to the entire population.

     Considering whether the sample results meet the tolerable error levels and
    whether further testing is needed.

    7. Form an Opinion and Conclude:

    o Based on the evaluation of the sample results, the auditor forms an opinion on the
    financial statements, internal controls, or specific audit objectives. If the sample results
    indicate errors or weaknesses, the auditor may expand the sample or perform additional
    procedures.

    Key Considerations in Audit Sampling:

     Sampling Risk: The risk that the sample selected does not represent the population and leads to
    incorrect conclusions.

     Non-Sampling Risk: The risk that the auditor makes an incorrect conclusion based on
    misinterpretation or improper application of audit procedures.

    By following these steps and applying appropriate sampling techniques, auditors can efficiently gather
    evidence that helps form their audit opinion while managing resource constraints.

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