tailieunhanh - Lecture Auditing and assurance services (6/e) - Module G: Variables sampling

After studying this chapter you will be able to: Define variables sampling and understand when it is used in the audit, understand the basic process underlying monetary unit sampling (MUS) and when to use it, identify the factors affecting the size of an MUS sample and calculate the sample size for an MUS application,. | Auditing & Assurance Services, 6e Variables Sampling Variables sampling is used to estimate the amount (or value) of a population Substantive procedures Estimate account balance or misstatement Compare estimated account balance or misstatement to recorded amount or tolerable misstatement Approaches Monetary unit sampling (MUS) Classical variables sampling Monetary Unit Sampling (MUS) Defines the sampling unit as an individual dollar (or other monetary unit) in an account balance Auditor will select individual dollars (or monetary units) for examination Auditor will verify the entire “logical unit” containing the selected dollar (or monetary unit) Accounts receivable: Customer account Inventory: Inventory item Effect of Factors on Sample Size Factor Effect How Determined Sampling risk (risk of incorrect acceptance) Inverse Using the audit risk model and based on prior assessments of audit risk, risk of material misstatement, and analytical procedures risk Tolerable misstatement Inverse Based on recorded account balance and relationship between the recorded account balance and important financial statement subtotals Expected misstatement Direct Based on prior experience with the client (for recurring audits) or a pilot sample (for initial audits) Population size Direct Based on the recorded balance in the account balance or class of transactions Summary: Sampling Risks Under Variables Sampling Account is not misstated (AM ≤ TM) Account is misstated (AM > TM) Account is not misstated (ULM ≤ TM) Correct decision Risk of incorrect acceptance Account is misstated (ULM > TM) Risk of incorrect rejection Correct decision Decision Based on Population Decision Based on Sample AM = Actual misstatement TM = Tolerable misstatement ULM = Upper limit on misstatements MUS: Selecting Sample Items Use systematic random sampling Calculate sampling interval as: Population size ÷ Sample size Process Identify random start Skip number of items equal to sampling interval Select item . | Auditing & Assurance Services, 6e Variables Sampling Variables sampling is used to estimate the amount (or value) of a population Substantive procedures Estimate account balance or misstatement Compare estimated account balance or misstatement to recorded amount or tolerable misstatement Approaches Monetary unit sampling (MUS) Classical variables sampling Monetary Unit Sampling (MUS) Defines the sampling unit as an individual dollar (or other monetary unit) in an account balance Auditor will select individual dollars (or monetary units) for examination Auditor will verify the entire “logical unit” containing the selected dollar (or monetary unit) Accounts receivable: Customer account Inventory: Inventory item Effect of Factors on Sample Size Factor Effect How Determined Sampling risk (risk of incorrect acceptance) Inverse Using the audit risk model and based on prior assessments of audit risk, risk of material misstatement, and analytical procedures risk Tolerable misstatement Inverse

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• Assurance services
• Financial statement audit
• Auditing and assurance services
• Auditing environment
• Variables sampling
• Monetary unit sampling
• Assurance services profession
• Auditing services
• Audit process
• Assurance framework
• Accounting information
• Professional standards
• Auditing standards
• Financial statement auditing
• Auditing business processes
• Auditing internal control
• Internal auditing services
• Contemporary auditing environment
• Attestation engagements
• Account balances
• Structure of the profession
• Audit firms
• Corporate governance
• Professional ethics
• Legal liability
• Liability to clients
• Financial repport audit process
• Financial report assertions
• The business
• Strategic business risk
• Inherent risk assessment
• Inherent risk
• Internal control structure
• Assessing control risk
• Tests of controls
• Sales cycle
• Substantive tests
• Substantive tests of transactions
• Audit sampling
• Sampling theory
• Adjusting events
• Financial report
• Auditor’s reporting obligations
• Professional reporting obligations
• Prospective financial information
• Highlight information
• Institute of internal auditors
• Government accounting
• Reporting duties