Case 6.58 Week 5

Case 6.58 Week 5

Process and benefits of audit sampling.
                The process of audit sampling starts with the selection of the accounts that are going to be reviewed during an audit based on the probability sampling methods (random, systematic or stratified). Probability sampling allows the auditor the feasibility to select the sample size as well as the items that are going to be examined. It allows auditors to identify how close the sample represents the population and how often the sample will be reflected the population.   In addition, in order to test the internal controls the auditor must define the objectives, the attributes, the population, the sampling unit, and the tolerable rate in relation to the level of control.
      Once the objectives attributes, population, sampling unit and tolerate rate have been selected the decision must be made on how to gather the data using either the statistical or non-statistical approach. Once that’s done thee auditor can perform the sampling plan and evaluate the sample results. This can be done by calculating the sample deviation rate of the population, consider the allowance for any sampling risk and the qualitative aspects of the deviations, and finally make their final conclusion. This last step is the formal conclusion of the audit and discusses the findings, opinions, and recommendations of the auditor.
      Sampling is most effective where a large number of similar transactions are processed in a similar manner. Audit sampling also depends on the overall significance of the population. If a small number of transactions make up the entire population then all items should be examined and not just a sample. The audit sampling process saves time, effort, and expense that are typically involved in a comprehensive audit. In the case Ourtown Independent School District audit sampling audit sampling will allow the auditor to determine which transactions made by the business manager can be considered business related...