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2000.04 REV-
(^) CHG-lO
Appendix
A
Attribute
Sampling
This (^) appendix applies
(^) to all
(^) chapters
(^) in (^) this audit
(^) guide.
When
(^) planning
(^) to (^) test (^) a (^) particular
(^) sample
(^) of (^) transactions,
(^) the (^) auditor
(^) should consider
(^) the
specific
(^) audit
(^) objective
(^) to (^) be (^) achieved
(^) and (^) should
(^) determine
(^) whether
(^) the (^) audit procedure
(^) or
combination
(^) of (^) procedures
(^) to (^) be (^) applied
(^) will (^) achieve
(^) that (^) objective.
(^) The
(^) size (^) of (^) a sample
necessary
(^) to (^) provide
(^) sufficient
(^) evidential
(^) matter depends
on^ (^) both
(^) the (^) objectives
(^) and (^) the
efficiency
(^) of (^) the (^) sample.
As (^) noted
(^) in (^) section
(^) l-7C
(^) of (^) chapter
(^) all (^) material
(^) instances
(^) of
noncompliance, including
(^) those
(^) identified
(^) through sampling,
(^) must
(^) he (^) reported
(^) as (^) findings
in the (^) audit
(^) report.
Determining
Test^ (^) Objective,
(^) Defining
(^) the Population,
(^) and (^) Defining
an^
BeforeException.
(^) beginning
(^) testing,
(^) the (^) auditor
(^) must
(^) understand
(^) and (^) document
(^) what
(^) attribute
(^) and/or
assertions
(^) are (^) being
(^) tested.
The (^) auditor
(^) needs
(^) to (^) identify
(^) and (^) document
(^) the (^) appropriate
population
(^) and (^) should
(^) also (^) perform
(^) procedures
(^) (e.g.,
(^) reconciliations,
(^) inquiry)
(^) to (^) ensure
(^) that
the (^) population
(^) from
(^) which
(^) the (^) samples
(^) are (^) selected
(^) is (^) complete.
Each
compliance
requirement
selected
for (^) testing
(^) should
(^) be
considered
a separate
population,
(^) and (^) samples
(^) should
(^) be (^) selected
(^) accordingly.
The (^) sample
(^) selected
(^) could
possibly
be used
to test
multiple
attributes
within
each
compliance
requirement.
Additionally,
(^) auditors
(^) must
(^) assess
(^) the (^) control
(^) environment
(^) at (^) entities
(^) with
(^) multiple
locations.
If controls
(^) at (^) the (^) different
(^) locations
(^) are (^) significantly
(^) different,
(^) each
(^) location
must (^) be (^) considered
(^) a (^) separate population.
The (^) auditor
(^) must
(^) document
(^) the (^) “sampling
(^) unit,”
(^) which
(^) is (^) the (^) individual
(^) item
(^) subject
(^) to
sampling
(^) in (^) the (^) population
(^) (i.e.,
(^) reconciliations.
(^) loan
(^) files,
(^) cash
(^) disbursements.
(^) cash
receipts,
(^) etc.).
When selecting
(^) the (^) sample
(^) of (^) individual
(^) items,
(^) auditors
(^) must ensure
(^) that (^) the (^) sample
(^) is
representative
(^) of (^) the (^) universe
(^) for (^) the (^) compliance
(^) requirement
(^) being
(^) tested.
The (^) auditor
(^) should
(^) also (^) clearly
(^) define what
(^) would
(^) be (^) considered
(^) an (^) exception.
A
single
exception would indicate
(^) noncompliance,
(^) subject
(^) to (^) further
(^) determination
(^) of (^) materiality
necessary
(^) to (^) determine
(^) the (^) required method
(^) of (^) reporting.
A.
Determining
(^) the (^) Sample
(^) Size.
To (^) determine
(^) attribute
(^) testing
(^) sample
(^) sizes,
(^) the (^) auditor
(^) needs
(^) to (^) determine
(^) the (^) value
for (^) three
(^) inputs:
(^) desired
(^) confidence
(^) level,
(^) tolerable
(^) exception
(^) rate,
(^) and expected
exception
(^) rate.
The (^) compliance
(^) table
(^) sample
(^) size
(^) is (^) based
(^) on (^) the (^) following
expectations.
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CHG-
Desired
(^) Confidence.
Auditors
(^) should
(^) obtain
(^) a (^) high (^) degree
(^) of (^) assurance
by (^) using
(^) a confidence
(^) level
(^) of (^) 90. (^) 95. (^) or (^99) (^) percent.
Tolerable
(^) Exception
(^) Rate.
(^) A (^) 5- (^) percent
(^) exception
(^) rate (^) is (^) acceptable.
Expected Exception
(^) Rate.
(^) No (^) exceptions
(^) should
(^) be (^) accepted.
Materiality.
Using
(^) attribute
(^) testing.
(^) monetary
(^) materiality,
(^) or (^) tolerable
misstatement
(^) is (^) not a^ (^) necessary
(^) input
(^) for (^) determining
(^) sample
(^) size.
B.
Sample
(^) Size
(^) Table.
(^) Using the
(^) preferences
(^) above and
(^) an (^) attribute
(^) sampling
software
(^) program,
(^) if (^) a high (^) level
(^) of (^) assurance
(^) is (^) defined
(^) as 90
(^) percent
(^) confidence
and (^) tolerable
(^) exception
(^) rate (^) is (^5) or (^10) (^) percent with
(^) an (^) expectation
(^) of zero^
exceptions,
(^) the (^) sample
(^) size (^) is (^48) (^) or (^23) (^) (respectively
(^) for (^5) and (^10) (^) percent
(^) exception
rates),
(^) which
(^) is (^) rounded
(^) to (^50) (^) and (^25) (^) below.
(^) Similarly,
(^) using
(^95) (^) percent
confidence,
(^) zero (^) exceptions,
(^) and (^) a (^5) or (^10) (^) percent tolerable
(^) exception
(^) rate, (^) the
sample
(^) size (^) is (^64) or^ (^) 32, (^) which
(^) is (^) rounded
(^) to (^65) (^) and (^35) (^) below.
Compliance
(^) sample
(^) size (^) table
Importance/significance
(^) of
Confidence
Tolerable
Minimum
(^) sample
(^) size (^) for
the (^) attribute
(^) being
(^) tested
level
rate
populations
(^) over
(^200)
Low
Low
High
I
High
This table
(^) is (^) illustrative
(^) but does
(^) not replace
(^) professional
(^) judgment.
As (^) noted
(^) in (^) the (^) table,
these
are^ (^) minimum
(^) sample
(^) sizes, and
(^) there
(^) may (^) be (^) many
(^) situations
(^) in (^) which
the^ (^) auditor
should
(^) also (^) consider
(^) qualitative
(^) factors
(^) when
(^) determining
(^) sample
(^) size.
Such (^) qualitative
factors may
(^) include
(^) but (^) are (^) not (^) limited
(^) to
First (^) year (^) the (^) auditor
(^) audited
(^) an (^) entity.
Larger,
(^) decentralized
(^) entities.
High (^) number
(^) of (^) findings
(^) in (^) the past.
Significant
(^) deficiencies
(^) or material
(^) weaknesses
(^) in (^) the (^) past.
Poor (^) internal
(^) controls.
Extremely
(^) high (^) volume
(^) of (^) activity
(^) in (^) a particular
(^) compliance
(^) requirement.
High (^) project employee
(^) turnover
(^) in (^) a particular
(^) area (^) or (^) department.
If the initial
(^) sample
(^) does not
(^) include
(^) a particular
(^) attribute
(^) being
(^) tested.
(^) typically
there would
(^) be (^) a (^) need
(^) to (^) have
(^) additional
(^) items
(^) included
(^) in (^) the (^) sample
(^) to (^) address
just (^) that (^) specific
(^) attribute.
4/
Page
REV-
CHG-
F.
Technical
(^) Assistance
(^) Available.
Technical
(^) guidance
(^) on (^) audit
(^) sampling
(^) is
available
(^) in (^) the (^) following
(^) documents:
SAS
(^) No. (^) 39. (^) Audit
(^) Sampling
(AICPA)
SAS
(^) No (^) 111. (^) Amendment
(^) to (^) SAS (^) No, (^) 39, (^) Audit
(^) Sampling (AICPA,
(^) Professional
Standards, vol.
AU
(^) sec. (^) 350),
(^) as (^) amended
AICPA
(^) Audit
(^) Guide.
(^) Audit
(^) Sampling,
(^) New Edition
(^) as (^) of (^) April
(^) 1, (^2001)
AICPA
(^) Audit
(^) Guide.
(^) Government
(^) Auditing Standards
SAS
(^) No. (^) 74.
Compliance
(^) Auditing Considerations
(^) in (^) Audits
(^) of (^) Governmental
Entities
and
Recipients
of Governmental
Financial
Assistance
(AICPA,
Professional Standards,
(^) vol. (^) 1, (^) AU (^) sec. (^) 801)
4/
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