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Guidelines for auditors on how to plan and execute attribute sampling during audits. It covers determining test objectives, defining populations and exceptions, and calculating sample sizes based on desired confidence levels and tolerable exception rates. The document also discusses minimum sample sizes for populations of different sizes and the importance of evaluating and reporting exceptions.
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Typology: Summaries
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(^) CHG-lO
Appendix
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.
single
exception would indicate
(^) noncompliance,
(^) subject
(^) to (^) further
(^) determination
(^) of (^) materiality
necessary
(^) to (^) determine
(^) the (^) required method
(^) of (^) reporting.
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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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.
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.
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Technical
(^) Assistance
(^) Available.
Technical
(^) guidance
(^) on (^) audit
(^) sampling
(^) is
available
(^) in (^) the (^) following
(^) documents:
(^) No. (^) 39. (^) Audit
(^) Sampling
(^) No (^) 111. (^) Amendment
(^) to (^) SAS (^) No, (^) 39, (^) Audit
(^) Sampling (AICPA,
(^) Professional
Standards, vol.
(^) sec. (^) 350),
(^) as (^) amended
(^) Audit
(^) Guide.
(^) Audit
(^) Sampling,
(^) New Edition
(^) as (^) of (^) April
(^) 1, (^2001)
(^) Audit
(^) Guide.
(^) Government
(^) Auditing Standards
(^) No. (^) 74.
Compliance
(^) Auditing Considerations
(^) in (^) Audits
(^) of (^) Governmental
Entities
and
Recipients
of Governmental
Financial
Assistance
Professional Standards,
(^) vol. (^) 1, (^) AU (^) sec. (^) 801)
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