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✔This includes all aspects of audit risk that are not due
to sampling.
Controlling the Risks
Auditors control sampling risks by:
✔Increasing the sample size.
✔Using an appropriate sample selection
method.
a) Stratified sampling
✔It decreases the effect of variance in the population & as a
result, decreases the sample size.
✔It allows the auditor to give more emphasis to those items
with higher monetary value.
b) Value weighted selection
✔Sometimes called probability proportional to size
sampling because the probability of an item to be selected is
directly proportional to the monetary value of such item.
✔Each peso is treated as one sampling unit that’s why value
weighted sampling is also called monetary unit sampling.
III. Evaluation of Results
Steps in evaluating sample results for substantive
tests:
1. Project the misstatements to the population.
a) Ratio estimation
b) Difference estimation
2. Compare the projected misstatements
together with the tolerable misstatements and
draw an overall conclusion.
EXAMPLE: (Projecting the misstatements to the population)
In terms of Value In terms of Amount of
number of misstatements
customers found
POPULATION P 10,000,000 200 ?
SAMPLE SIZE P 1,000,000 24 P 48,000