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2009 A-5 Class Notes PDF
2009 A-5 Class Notes PDF
I. AUDITING 5
A. AUDIT SAMPLING
1. Audit sampling occurs when the auditor tests less than 100% of the items in a
population and tries to draw conclusions about the population based on the sample.
2. Sampling risk is the risk that the sample is not representative of the population, and
therefore the auditor's conclusion will be incorrect.
3. Sampling can be either statistical or nonstatistical.
a. Either method is acceptable.
b. Statistical methods rely on mathematical concepts.
c. Both methods involve the use of judgment.
4. Be familiar with the advantages of statistical sampling.
B. TYPES OF SAMPLING AND SAMPLING RISK
1. Attribute Sampling used to estimate a rate of occurrence.
Attribute sampling is used in tests of controls. Sampling risk associated with
attribute sampling includes:
a. Risk of assessing control risk too low
(1) The sample indicates the control is working when in fact, it is not.
(2) The auditor will erroneously rely on the control.
(3) This is an effectiveness problem.
b. Risk of assessing control risk too high
(1) The sample indicates the control is not working when in fact, it is.
(2) The auditor will erroneously extend audit work.
(3) This is an efficiency problem the auditor will do more work than is
necessary.
2. Variables Sampling used to estimate a numerical quantity.
Variables sampling is used in substantive testing. Sampling risk associated with
variables sampling includes:
a. Risk of incorrect acceptance
(1) The sample indicates the balance is fairly stated when in fact, it is not.
(2) The auditor will erroneously fail to modify his/her opinion.
(3) This is an effectiveness problem.
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2009 DeVry/Becker Educational Development Corp. All rights reserved.
Becker CPA Review Auditing 5 Class Notes
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2009 DeVry/Becker Educational Development Corp. All rights reserved.
Becker CPA Review Auditing 5 Class Notes
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2009 DeVry/Becker Educational Development Corp. All rights reserved.
Becker CPA Review Auditing 5 Class Notes
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2009 DeVry/Becker Educational Development Corp. All rights reserved.
Becker CPA Review Auditing 5 Class Notes
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2009 DeVry/Becker Educational Development Corp. All rights reserved.
Becker CPA Review Auditing 5 Class Notes
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2009 DeVry/Becker Educational Development Corp. All rights reserved.
Becker CPA Review Auditing 5 Class Notes
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2009 DeVry/Becker Educational Development Corp. All rights reserved.
Becker CPA Review Auditing 5 Class Notes
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2009 DeVry/Becker Educational Development Corp. All rights reserved.