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Auditing and Regulation

Sampling is an important testing method in any audit for collecting evidence prior to complete the audit All audits involve sampling because the auditor cannot examine 100% of the transactions during a period; yet the auditor must reach conclusions about the accuracy of the underlying populations that make up an account balance.

The objective of sampling is to estimate the amount of misstatement in an underlying population such as an account balance. But, sampling always contains some risk, i.e. the auditor might not look at enough items, or the sample might not be representative.

Thus, auditors must consider how to take samples that minimize the likelihood that we will reach an incorrect conclusion about what we are testing. Statistically based sampling allows us to control the risk that we might reach an incorrect conclusion.

Discussion the following:
  1. Discuss the appropriate places to use audit sampling.
  2. Discuss and assess the risks associated with all sampling procedures.
  3. Discuss the differences between non-statistical and statistical sampling as a basis to determine the appropriate sampling methodology.
  4. Describe how attribute estimation sampling can be used to test controls
  5. Discuss the steps involved in using sampling for substantive tests of account balance.

In your own words, post a substantive response to the Discussion Board question(s) and comment on other postings. Your response should address the DB question(s) and move the conversation forward. You will be graded on the quality of your postings, including mastery of the concept as well as critical thinking. If asked for your opinion, do not simply state that it is a good or bad idea; elaborate on your reasons and argument. Include enough detail to substantiate your thinking as well as your position on the questions or comments.

Your assignment will be graded in accordance with the following criteria. Click here to view the grading rubric.

For assistance with your assignment, please use your text, Web resources, and all course materials.

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