Audit Report

#1 – Audit sampling is the application of an audit procedure to less than 100% of the items within an account balance or class of transactions for the purpose of evaluating some characteristic of the balance or class.

#2 – Statistical sampling helps the auditor to: (1) design an efficient sample, (2) measure the sufficiency of the audit evidence obtained, and (3) evaluate the sample results.

#3 – Sampling risk includes the possibility that the sample size selected may be too small to achieve the sampling objective (e.g., sample items selected disclose no errors).

#4 – These two errors generally result in an auditor performing unnecessary additional procedures. Efficiency

#5 – Sampling risk arises from the possibility that an auditor’s conclusions based upon a sample would differ from the conclusions drawn when examining the entire population (i.e., the risk that the sample examined is not representative of the population). May not

#6 – The risk of assessing control risk too low is the risk that the sample supports the auditor’s planned degree of reliance on the control when the true compliance rate would not support such reliance.

#7 – Statistical sampling provides the auditor with a means of assessing sampling risk—the risk that the sample will not accurately reflect the population characteristics. Measuring

#8 – The objective of the allowance for sampling risk is to estimate the confidence interval (range of procedural deviations) of the population.

#9 – Tests of controls utilize attribute sampling. Attribute sampling is based on the binomial distribution which describes yes/no decisions, and error/nonerror situations.

#10 – Attribute sampling expresses a conclusion about the population in terms of a rate of occurrence. Accordingly, determining the percentage of slow-moving inventory items would be an appropriate attribute sampling application.

#11 – Attribute sampling is used to estimate the error rate for internal control...