Introduction 1-22
The Development of Audit Sampling 1-11
The Significance of Audit Sampling 12
The Purpose of This Guide 13-20
Audit Sampling Guidance for Compliance Audits 21-22
1 Characteristics of Audit Sampling 01-29
Audit Sampling Defined 04-05
Procedures That May Not Involve Audit Sampling 06-20
Inquiry and Observation 07
Analytical Procedures 08-09
Procedures Applied to Every Item in a Population 10-12
Some Tests of Controls May Not Involve Audit Sampling 13-14
Tests of Controls When Extrapolation Is Not Intended 15
Procedures That Do Not Evaluate Characteristics 16-17
Untested Balances 18
Tests of Automated IT Controls 19-20
Sampling and Nonsampling Audit Procedures Distinguished 21-25
Terminology Used in This Guide 26-29
Reliability or Confidence Level 27
Sampling Risk 28
Precision 29
2 The Audit Sampling Process 01-55
Purpose and Nature of Audit Sampling 02
How Audit Sampling Differs From Sampling in Other Professions 03-06
Evaluation of Audit Samples 07
Types of Audit Tests 08-14
Tests of Controls 09-10
Substantive Procedures 11
Dual-Purpose Tests 12-14
Risk 15-21
Sampling Risk 19
Nonsampling Risk 20-21
Nonstatistical and Statistical Sampling 22-29
Planning the Audit Sampling Procedures 30-34
Types of Statistical Sampling Plans 35-43
Attributes Sampling 35-37
Variables Sampling 38-41
Relating Balance Sheet and Income Statement Sampling 42-43
General Implementation Considerations 44-55
Continuing Professional Education 45-48
Sampling Guidelines 49
Use of Specialists 50-51
Supervision and Review 52-55
3 Nonstatistical and Statistical Audit Sampling in Tests of Controls 01-98
Determining the Test Objectives 02-05
Defining the Deviation Conditions 06
Defining the Population 07-10
Defining the Period Covered by the Test 11-21
Initial Testing 14
Estimating Population Characteristics 15-17
Considering the Completeness of the Population 18-21
Defining the Sampling Unit 22-24
The Role of Walk-throughs 25-28
Determining the Method of Selecting the Sample 29-36
Simple Random Sampling 30
Systematic Sampling 31-32
Haphazard Sampling 33-34
Block Sampling 35-36
Determining the Sample Size 37-65
Considering Sampling Risk in Assessing Controls Effectiveness 38-45
Considering Other Evidence in Determining Risk of Concluding Controls Are More Effective Than They Actually Are (Overreliance) and Tolerable Rate of Deviation 46
Considering the Risk of Concluding Controls Are More Effective Than They Actually Are (Overreliance) for Multiple Controls Addressing the Same Control Objective 47
Determining the Tolerable Rate of Deviation 48-54
Considering the Expected Population Deviation Rate 55-58
Considering the Effect of Population Size 59-61
Small Populations and Infrequently Operating Controls 62-63
Considering a Sequential or a Fixed Sample Size Approach 64
Developing Sample Size Guidelines 65
Performing the Sampling Plan 66-72
Voided Documents 67
Unused or Inapplicable Documents 68
Mistakes in Estimating Population Sequences 69-70
Stopping the Test Before Completion 71
Inability to Examine Selected Items 72
Evaluating the Sample Results 73-95
Calculating the Deviation Rate 74
Considering Sampling Risk 75-79
Considering the Qualitative Aspects of the Deviations 80-81
Extending the Sample When Control Deviations Are Found 82-84
Assessing the Potential Magnitude of a Control Deficiency 85-94
Reaching an Overall Conclusion 95
Documenting the Sampling Procedure 96-98
4 Nonstatistical and Statistical Audit Sampling for Substantive Tests of Details 01-108
Determining the Test Objectives 04-05
Defining the Population 06-12
Considering the Completeness of the Population 08-10
Identifying Individually Significant Items 11-12
Defining the Sampling Unit 13-14
Choosing an Audit Sampling Technique 15-16
Selecting the Sample 17-22
Determining the Sample Size 23-74
Considering Variation Within the Population 27-32
Determining the Acceptable Level of Risk 33-47
Considering Tolerable Misstatement 48-49
Performance Materiality and Tolerable Misstatement 50-59
Considering the Expected Amount of Misstatement 60-61
Considering the Effect of Population Size 62
Relating the Factors to Determine the Sample Size 63-74
Performing the Sampling Plan 75-76
Evaluating the Sample Results 77-104
Projecting the Misstatement to the Population 77-89
The Sufficiency of Sampling Evidence for Proposing Adjustments 90
Negative Confirmations 91
Interim Sample Results 92
Considering Sampling Risk at the Test Level 93-100
Misstatements Not Projected 101-104
Documenting the Sampling Procedure 105-108
5 Nonstatistical Sampling Case Study 01-16
Determining the Sample Size 08-11
Evaluating the Sample Results 12-16
6 Monetary Unit Sampling 01-63
Selecting a Statistical Approach 04-08
Advantages 05-06
Disadvantages 07-08
Defining the Sampling Unit 09-10
Selecting the Sample 11-19
Determining the Sample Size 20-31
Formula Method—No Misstatements Expected 23-25
Formula Method—Some Misstatements Expected 26-31
Evaluating the Sample Results 32-52
Sample Evaluation With 100 Percent Misstatements 35-41
Sample Evaluation With Less Than 100 Percent Misstatements 42-48
Quantitative Considerations 49-51
Qualitative Considerations 52
MUS Sampling Case Study 53-63
Selecting the Sample 56-58
Evaluating the Sample Results 59-63
7 Classical Variables Sampling 01-48
Selecting a Statistical Approach 03-06
Advantages 04
Disadvantages 05-06
Types of Classical Variables Sampling Techniques 07-10
Mean-Per-Unit Approach 08
Difference Approach 09
Ratio Approach 10
Choosing a Classical Variables Sampling Approach 11-15
The Ability to Design a Stratified Sample 12
The Expected Number of Differences Between the Audited and Recorded Amounts 13
Required Information 14-15
Determining the Sample Size 16-24
Considering Variation Within the Population 17-19
Calculating the Sample Size 20-24
Evaluating the Sample Results 25-39
Classical Variables Sampling Case Study 40-48
Appendix
A Attributes Statistical Sampling Tables
B Sequential Sampling for Tests of Controls
C Monetary Unit Sampling Tables
D Ratio of Desired Allowance for Sampling Risk of Incorrect Rejection to Tolerable Misstatement
E Multilocation Sampling Considerations
F Case Study Using Software to Plan and Evaluate a Classical Variables Sample
G Glossary
H Overview of Statements on Quality Control Standards
I Schedule of Changes Made to the Text From the Previous Edition
Index of Pronouncements and Other Technical Guidance
