As the assessed levels of inherent risk, control risk, and detection risk for other substantive procedures directed toward the same specific audit objective decreases, the auditor’s allowable risk of incorrect acceptance for the substantive tests of details increases and, thus, the smaller the required sample size for ...
What factors impact sample size in the audit of substantive tests of account balances?
As the assessed levels of inherent risk, control risk, and detection risk for other substantive procedures directed toward the same specific audit objective decreases, the auditor’s allowable risk of incorrect acceptance for the substantive tests of details increases and, thus, the smaller the required sample size for ...
What are the factors that influencing sample size for tests in auditing?
The study found out that that materiality of audit issue, type of information available, source of information, degree of risk of misstatement and auditor skills and independence are some of the factors influencing the sample size determination for the purposes of internal audit evidence collection in public sector in ...
Which of the following factors influences desired sample size?
In general, three or four factors must be known or estimated to calculate sample size: (1) the effect size (usually the difference between 2 groups); (2) the population standard deviation (for continuous data); (3) the desired power of the experiment to detect the postulated effect; and (4) the significance level.
How would an increase in tolerable misstatement affect the sample size in a substantive test of details?
The sampling interval is calculated by dividing the number of physical units in the population by the sample size. How would increases in tolerable misstatement and assessed level of control risk affect the sample size in a substantive test of details? ... Increase in Tolerable Misstatement = Decrease sample size .
What are the two approaches to audit sampling?
The auditor usually will have no special knowledge about other account balances and transactions that, in his judgment, will need to be tested to fulfill his audit objectives. Audit sampling is especially useful in these cases. . 03 There are two general approaches to audit sampling: nonstatistical and statistical .
What is the primary purpose of audit documentation?
It provides evidence of the auditor’s basis for a conclusion about the achievement of the overall objective . It provides evidence that the audit was planned and performed in accordance with ISAs and other legal and regulatory requirements. It assists the engagement team to plan and perform the audit.
What is confidence level in auditing?
The confidence level is the likelihood that the true rate inherent in the client’s entire book of business is somewhere in the confidence interval . For example, assume the results of an audit show a 15-percent exception rate.
What is permanent and current audit file?
Current audit files contain information that relates to a specific audit engagement . ... Permanent audit files include information that concerns the organizational and legal structure of a client. Current files consist of information relating to correspondences, planning process, audit programmers, accounting records, etc.
What are key items in audit?
High value or key items. The auditor may decide to select specific items within a population because they are of high value, or exhibit some other characteristic, for example items that are suspicious, unusual , particularly risk-prone or that have a history of error.
What are the 3 factors of sampling?
Three factors are used in the sample size calculation and thus, determine the sample size for simple random samples. These factors are: 1) the margin of error, 2) the confidence level, and 3) the proportion (or percentage) of the sample that will chose a given answer to a survey question.
How a sample size is determined?
In practice, the sample size used in a study is usually determined based on the cost, time, or convenience of collecting the data, and the need for it to offer sufficient statistical power . ... In a census, data is sought for an entire population, hence the intended sample size is equal to the population.
How do you know what sample size to use?
- The minimum sample size is 100. ...
- A good maximum sample size is usually 10% as long as it does not exceed 1000. ...
- Choose a number between the minimum and maximum depending on the situation. ...
- If you want to be a bit more scientific then use this table. ...
- Relax and stop worrying about the formulas.
What are the methods of audit sampling?
- random selection.
- systematic selection.
- monetary unit sampling.
- haphazard selection, and.
- block selection.
What are the types of evidence in auditing?
- Financial statements,
- Accounting information.
- Bank accounts.
- Management Accounts,
- Fixed Assets Register,
- Payrolls Listing,
- Banks Statements,
- Bank confirmation,
How is tolerable misstatement calculated?
If the perceived risk level is high, the tolerable misstatement will be a smaller percentage of the planning materiality , such as 10-20%. Conversely, if the perceived risk level is low, the tolerable misstatement can be a much higher percentage of the planning materiality, such as 70-90%.
