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
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.
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:
During the audit 213 sales transactions were examined to test revenue controls; 82 deviations were found and are as follows:
The audit universe is defined by sampling a list of transactions that test the controls of the financial statements. The higher suspicion of risk will cause the sampling size to increase to ensure the materiality of the transaction. The most preferable testing procedure is sending out confirmations for bank balances, legal issues, and accounts receivable. Also looking at a trial balance of accounts and talking to Kroger’s management team can identify what and how many testing samples are
...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
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
If there is any risk of management override, the auditor is required to exam the journal entries, check accounting estimates for biases that cause of fraud, and evaluate the significant transactions which is not in the regular business
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...
The major characters of the tradition audit are all information what is needed by auditors are on the paper and the manual calculators and without high communication technology. Auditors usually were limited by the place in the paper time. When a several people are working on the same auditing project for a client with offices in cities across the country, even worldwide, it takes a lots all time those auditors get the information which they need from the client, even there is risk paper information disappear for many reasons. on the another hand, mail paper information increase the auditing cost. The mistake caused by the manual calculators inevitably, no matter how fixed auditors concentrate on recalculate is, after all auditors are human. The global business become major in the modern business world, some example, several auditors who are in different locations are working a same auditing project, or auditors are in different city even country with the client, when there is issue among these auditors or between auditors and client, they only can communicate with each other by phone or be together and have meeting. Phone call can not make sure information been watched in the same time when the voice is talking about the issue, but having a meeting takes time and money make all people together, it increases auditing cost.
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
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.
a. Sampling Design: which deals with the method of selecting items to be observed for researcher`s study.