Page 126 - DCOM509_ADVANCED_AUDITING

Unit 7: Audit Sampling

or an intentional omission of certain numbers. If the auditor selects such a document, he Notes
should obtain reasonable assurance that the voucher number actually represents an unused
voucher and does not represent a deviation. The unused voucher may then be replaced
with an additional voucher.
 Errors in Random-Number Selection: In a situation where the auditor generates a random
number that is not part of the population, that number should be replaced with another
random number which is part of the population.

 Inability to Examine Selected Items: If an item selected is missing and it cannot be
determined what happened to the item, it should normally be considered a deviation.

Stratification

In order to make a population more homogeneous for variables sampling, the auditor can use
stratification. It is important to note that generally, stratification requires that the sample results
be extrapolated to each stratum separately. Stratification is most often performed during
computer assisted audits. Computer software applications can easily segregate a population
and provide subtotals. It is required that auditors contact the Computer Assisted Audit Team
when working with a high volume of transactions or with large data files.
The following are some methods of stratification:
 By Dollar Amount - This is the most common type of stratification used by auditors. The
auditor needs to identify the number of different ranges, and their dollar values, into
which the population most usually falls.
 By Nature of the Items - An easy way to stratify a total population is to stratify based on
the nature of the transactions, such as sales of tangibles and sales of services.
 By Nature of the Test - Another way to stratify a population is to divide the items into
groups according to the nature of the test to be performed.
Evaluating the Sampling Results Step 8

After completing the examination of the sampling units and summarizing the deviations from
prescribed control procedures, the auditor evaluates the results. Whether the sample is statistical
or non-statistical, the auditor uses judgment in evaluating the results and reaching an overall
conclusion.
The auditor must determine how the outcome of the sample affects the test conclusions and the
overall audit approach. If the auditor is testing the reliability of a certain record, the outcome of
the attribute sample will either show deviations or no deviations.

Extrapolating Results (when 5 or more deviations are found)

If the test is a variables sample and five or more errors are found, the auditor must extrapolate
the results to the remainder of the population. This procedure calculates the percentage of error
(POE) found in the sample and applies that result to the population tested.

Notes If fewer than five deviations are found in a non-stratified sample the auditor should
detail the exceptions instead of extrapolating. If working with a stratified sample the
auditor should detail the errors in each strata sample that contains fewer than three errors.

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