CPA AUD Audit Sampling — Flashcards

CPA AUD audit sampling involves testing less than 100% of a population to form conclusions about the whole, requiring professional judgment to balance risk and efficiency. Key factors influencing sample size include expected error rates, tolerable misstatement, and sampling risk. It is heavily tested on the CPA exam, covering both statistical and non-statistical methods. 

Key Concepts in CPA AUD Sampling
Sampling Risk: The risk that the auditor’s conclusion based on a sample might differ from the conclusion if the entire population were tested.
Risk of Assessing Control Risk Too Low (Effectiveness): Affects audit effectiveness; leads to under-auditing.
Risk of Assessing Control Risk Too High (Efficiency): Affects audit efficiency; leads to over-auditing.
Non-sampling Risk: Risks not related to sampling, such as using inappropriate procedures or misinterpreting results.

Factors Affecting Sample Size (AUD Sampling Factors Table):
Increase in Population Size: Increases sample size.
Increase in Expected Error Rate: Increases sample size.
Increase in Tolerable Misstatement: Decreases sample size.
Increase in Sampling Risk (Confidence Level): Increases sample size. 

Sampling Methods
Statistical Sampling: Uses laws of probability to measure sampling risk and determine sample size, providing objective results.
Non-statistical (Judgmental) Sampling: Uses professional judgment rather than probability theory.
Stratified Sampling: Dividing a population into subpopulations (strata) with similar characteristics (usually dollar value) to reduce sample size.
Monetary Unit Sampling (MUS): A statistical method that assigns higher selection probability to larger dollar amounts, often used for overstatement tests. 

Sampling in Testing Types
Tests of Controls (Attributes Sampling): Focuses on deviation rates (e.g., did a control operate effectively?).
Substantive Testing (Variables Sampling): Focuses on dollar amount misstatements. 

Selecting Samples
Random Selection: Each item has an equal chance of selection.
Systematic Selection: Selecting every nth item.
Haphazard Selection: Selecting items without bias but without a specific technique.
Block Selection: Selecting a chunk of items in a sequence; generally not recommended for statistical sampling.