Summary
Summary Audit Sampling
- Institution
- Stellenbosch University (SUN)
This is a complete summary of Audit sampling and how it works.
[Show more]
Seller
FollowContent preview
AUDIT SAMPLING – ISA 530Monetary Unit Sampling
The population is divided into monetary units - i.e. the rand units the total
account balance consists of;
A sample unit is identified - as an individual monetary unit, i.e. an
individual rand.
After the rand value has been selected - it is traced to the physical item
(such as invoice/account) that contains the particular monetary unit,
By means of a column - with accumulated values of the relevant individual
account balances or transactions.
Applicability
MUS focuses on high-value items - in other words where there is a bigger
probability of material overstatement.
MUS will be applicable because:
- trade debtors is an asset - and the primary risk is thus overstatement;
- a computerized database of debtors is available;
- there are no nil or negative balances in the debtors' ledger;
- As it focuses on larger debtors' balances - it gives the advantage of
smaller samples which leads to increased effectiveness.
MUS: advantages
especially for overstatement testing
all items >interval will be selected
focus on high value items-> bigger chance on selection
bigger chance for reasonable errors
smaller sample
MUS: disadvantages
• doesn’t test for understatement or
• zero or negative values
BENEFITS OF AUDIT SAMPLING
More cost-effective audit.
, Time saving when performing audit.
More representative tests being performed.
More focused test being performed.
USE OF PROFESSIONAL JUDGEMENT IN AUDIT SAMPLING
Auditor is still required to exercise his/her judgement - irrespective of
whether statistical sampling is used.
Auditor uses judgement when planning the sample in determining:
- The sampling unit
- Acceptable error percentage
- The expected error percentage
- In determining the confidence level
- Determining the definition of the error.
Professional judgement is also used - in determining which selection
method is to be used.
In systematic sampling - the first selection between 1 and the interval is
selected using professional judgement.
2 situations where judgement in not used is when:
- The sample size
- Extrapolation of the results of the sample to the population
Even if the expected error is extrapolated over the population - The
auditor must still use his/her judgement to evaluate the error and make a
conclusion.
UNSATISFACTORY SAMPLING RESULTS
Unsatisfactory result - if the estimated population error of 5% exceeds the
acceptable error percentage of 3%. (Population Error > Tolerable Error)
Consequences of Unsatisfactory Results in:
Inspect DNs for clients signature as proof of delivery
– Problems may exist with the debtors are year-end if debtors questions
their outstanding debt and no evidence of delivery can be presented
by ZYX Limited.
The benefits of buying summaries with Stuvia:
Guaranteed quality through customer reviews
Stuvia customers have reviewed more than 700,000 summaries. This how you know that you are buying the best documents.
Quick and easy check-out
You can quickly pay through EFT, credit card or Stuvia-credit for the summaries. There is no membership needed.
Focus on what matters
Your fellow students write the study notes themselves, which is why the documents are always reliable and up-to-date. This ensures you quickly get to the core!
Frequently asked questions
What do I get when I buy this document?
You get a PDF, available immediately after your purchase. The purchased document is accessible anytime, anywhere and indefinitely through your profile.
Satisfaction guarantee: how does it work?
Our satisfaction guarantee ensures that you always find a study document that suits you well. You fill out a form, and our customer service team takes care of the rest.
Who am I buying this summary from?
Stuvia is a marketplace, so you are not buying this document from us, but from seller laurenabrahams. Stuvia facilitates payment to the seller.
Will I be stuck with a subscription?
No, you only buy this summary for R85,00. You're not tied to anything after your purchase.
Can Stuvia be trusted?
4.6 stars on Google & Trustpilot (+1000 reviews)
57114 documents were sold in the last 30 days
Founded in 2010, the go-to place to buy summaries for 14 years now