Audit Sampling is very important to auditor to make their audit because easy for auditor fulfill their job with give opinion and make a conclusion from the account balance. It is not practical for auditor to audit 100% of the items in the account balance, that why auditor apply for audit sampling to obtain audit evidence from the account balance. Audit Sampling is testing less than 100% of the item within a population on a company client to obtain and evaluate evidence about some characteristics of that population. Population means that the entire of set of data which sample are selected. The objective auditor apply for audit sampling is to provide a reasonable basis for auditor to draw a conclusion about population from which sample …show more content…
Statistical sampling can be classified with three criteria: 1) the sample size must be determined objectively or quantitatively, 2) the sample must be selected randomly and 3) the sample result must be evaluated mathematically. Statistical sampling is appropriate when the population is made up of large number of similar transaction and internal control is good, if internal control is poor the auditor may have difficult errors in advance so may use non-statistical sampling. When auditor want to evaluated sample result statistically with a substantive test, the auditor should determines the most likely estimate of the price amount of error in the population and calculates the range within the true. In test of control the auditor must finds the error rate of sample and then determine how high the actual error rate could be, at a particular level of …show more content…
In non-statistical sampling those items that the auditor believes will provide the most useful information are selected. On the part of the internal control system, auditor will use statistical sampling when internal control is good and if internal control is poor it is appropriate to auditor use non-statistical sampling, Summarize between statistical sampling and non-statistical sampling is for statistical sampling is appropriate when using a random selection, systematic selection, probability proportion of size and monetary unit sampling. Non-statistical sampling is appropriate when using a two method which haphazard selection and block
The analytical procedures is yet another way to detect the fraud. Through analytical procedures the relationship between different figures is develop that support the increase or decrease effect on the balance sheet and the income statement. The following procedures to be performed:
Two sampling methods include mail surveys and convenience sampling, a variation of a nonprobability sample. Mail surveys, inexpensive way to contact individuals over a large geographical area, provide anonymity to the respondent, and eliminate interview bias. Convenience sampling, a nonprobability sample, the only criteria is the convenience of the unit to the researcher, fast and uncomplicated, but the sampling error not determined.
...ear-end. In terms of extent, we can perform the audit without a substantially high number of samples while remaining effective at the same time.
Analytical procedures are used at the initiation of an audit in order to carve a clear path into what areas, accounts in particular, of the financial statements of the company we will be placing more emphasis on in order to identify and assess the risks of material misstatement
During the audit 213 sales transactions were examined to test revenue controls; 82 deviations were found and are as follows:
AUC-315 shows the auditor responsibility toward the internal control components. The auditor required to understand and obtain the environmental control, risk assessment process, the IT and business related to it, control activities, and monitoring of controls in order to determine and define the risk of misstatement. When the auditor evaluates the internal control, he should consider the ethical values and integrity, competence of management levels, participation of governance people, management's approach, entity’s structure, authority and responsibility, and HR policies. During 1995 through 1977, CUC had some weaknesses in its control environment, such as the weakness of the board as regards financial matters, and the management style through focusing on Wall Street analysts’ expectations. There are many examples of management override its internal control, one of them is recording the amounts received from customers for deferred revenues as current revenues.
To counter this problem, computer assisted audit techniques have been developed. These systems are able to provide a more in depth analysis of the utilized billing systems. Computer assisted audit techniques also enable highly efficient assessment of transactions. By utilizing this system, an auditor could gain a clearer picture of the revenue reporting mechanisms that are being utilized by the business office. Once the information is derived, however, its interpretation, while simpler, will still require an individual that is knowledgeable in regard to the revenue cycle
An auditor tests the controls the company has set up for the sales cycle to determine how strong and reliable they are. If they are strong, the auditor can reduce the amount of transaction testing he must do. Common internal controls over the sales cycle include numbered sales invoices, purchase order authorization over a certain limit and authorization over receivables write-offs.
The study of evaluation of statistical results made me able to interpret the result in an effective manner in order to clarify the test results and significance of the study. Through the study of these five elements, hopefully I will be able to utilize the knowledge of course in practical life and implement the various elements of statistics in research related to some particular topic Petocz & Reid, (2003). Similarly, by studying this course one could apply the knowledge by evaluating stock exchange data. Once thing I do know is that analysis with inappropriate statistical tests leads us to draw inappropriate and incorrect
Subsequent to obtaining the accounting information, managerial accountants will then proceed to use it to plan, evaluate the company performance and also control the business operations. With regards to planning, the managers are required to make decisions concerning the kind of product to introduce into the market, when to introduce the product and where the production should take place. In performance evaluation, individual product lin...
I am interested in conducting research and teaching in managerial accounting, auditing and assurance services and accounting information systems. In particular, I am interested in exploring the role of accounting information systems in decision making, internal control, and auditing. In order to gain an appreciation of these and related issues, it is essential for me to have a strong grounding accounting, accounting information systems, information technology, managerial accounting, as well as gain a general economic and management perspective.
Subsequent to obtaining the accounting information, managerial accountants will then proceed to use it to plan, evaluate the company performance and also control the business operations. With regards to planning, the managers are required to make decis...
Auditing has been the backbone of the complicated business world and has always changed with the times. As the business world grew strong, auditors’ roles grew more important. The auditors’ job became more difficult as the accounting principles changed. It also became easier with the use of internal controls, which introduced the need for testing, not a complete audit. Scandals and stock market crashes made auditors aware of deficiencies in auditing, and the auditing community was always quick to fix those deficiencies. Computers played an important role of changing the way audits were performed and also brought along some difficulties.
Audit is a process to evaluate and review the accounts and financial statement objectively. We can divide it into internal auditors and external auditors. Internal auditors have a inner knowledge of business process. Auditor has access to the much confidential information and all levels of management. But they may lose their judgement and they are not acceptable by the shareholder. “The overall objective of the external auditors is to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to report on the financial statements in acco...
a. Sampling Design: which deals with the method of selecting items to be observed for researcher`s study.