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    Advanced Audit & Corporate Governance (ACCT 3320) Group Assignment

    Uploaded by

    Reena Jay
    This article summarizes research on audit sampling and identifies areas for further research. It develops a framework for the audit sampling process consisting of four phases: application, planning, performance, and evaluation. The planning phase involves determining the sampling technique, defining misstatements, and deciding sample size based on expected and tolerable errors. Performance is a critical phase where audit procedures are conducted on sample items. Evaluation determines the causes of errors and considers sampling risk. While research has influenced auditing standards, it provides limited insights into current sampling use. The article suggests important judgments include assessing sampling applicability and technique selection while accounting for environmental factors.

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    Advanced Audit & Corporate Governance (ACCT 3320) Group Assignment

    Uploaded by

    Reena Jay
    64 views4 pages
    This article summarizes research on audit sampling and identifies areas for further research. It develops a framework for the audit sampling process consisting of four phases: application, planning, performance, and evaluation. The planning phase involves determining the sampling technique, defining misstatements, and deciding sample size based on expected and tolerable errors. Performance is a critical phase where audit procedures are conducted on sample items. Evaluation determines the causes of errors and considers sampling risk. While research has influenced auditing standards, it provides limited insights into current sampling use. The article suggests important judgments include assessing sampling applicability and technique selection while accounting for environmental factors.

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    This article summarizes research on audit sampling and identifies areas for further research. It develops a framework for the audit sampling process consisting of four phases: application, planning, performance, and evaluation. The planning phase involves determining the sampling technique, defining misstatements, and deciding sample size based on expected and tolerable errors. Performance is a critical phase where audit procedures are conducted on sample items. Evaluation determines the causes of errors and considers sampling risk. While research has influenced auditing standards, it provides limited insights into current sampling use. The article suggests important judgments include assessing sampling applicability and technique selection while accounting for environmental factors.

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    © All Rights Reserved
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    Download as docx, pdf, or txt
    64 views4 pages

    Advanced Audit & Corporate Governance (ACCT 3320) Group Assignment

    Uploaded by

    Reena Jay
    This article summarizes research on audit sampling and identifies areas for further research. It develops a framework for the audit sampling process consisting of four phases: application, planning, performance, and evaluation. The planning phase involves determining the sampling technique, defining misstatements, and deciding sample size based on expected and tolerable errors. Performance is a critical phase where audit procedures are conducted on sample items. Evaluation determines the causes of errors and considers sampling risk. While research has influenced auditing standards, it provides limited insights into current sampling use. The article suggests important judgments include assessing sampling applicability and technique selection while accounting for environmental factors.

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    ADVANCED AUDIT & CORPORATE GOVERNANCE

    ( ACCT 3320 )

    GROUP ASSIGNMENT

    SUMMARY OF ARTICLE :

    AUDIT SAMPLING RESEARCH , A SYNTHESIS AND IMPLICATION


    FOR FUTURE RESEARCH

    NAME MATRIC NO.


    TEH YIK HON 162017112
    FHAZREENA JABARALI 153015650
    OOI CHUAN YEE 163017695
    JOSHUA ARPUTHASAMY 153015723

    LECTURER:

    MADAM NURKAMARIAH KASIM


    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 characteristics of the
    balance or class. Firstly in the research, they design a framework of the audit sampling process based
    on existing auditing standards and guidance. After that, review relevant literature for each step in
    the audit process. A fairly extensive literature exists on some sampling issues, such as determination
    of sample size and projection of misstatements found in the sample. An extensive, but generally
    dated literature also exists on various statistical sampling techniques. However, limited evidence
    exists for many issues related to audit sampling.

    While research has influenced auditing standards for audit sampling, academic research provides
    limited insights into the current use of audit sampling. We synthesize relevant research based on a
    sampling decision framework and suggest areas for additional research. Important judgments
    include determining:

    • Does sampling apply?


    • What type of sampling to apply (e.g, attribute or monetary sampling)
    • Whether to use statistical or non-statistical techniques, including appropriate inputs to
    determine sample size and evaluate results
    • Consideration of environmental factors such as regulation, litigation, competition, culture,
    and technology.
    Method
    Audit sampling method involves four phases which are application, planning, performance
    and evaluations. Initially, a model of of the audit sampling process been developed by taking
    into account all those environment such as client complexity and utilization of technology,
    legal and regulatory environment and changes in audit approaches which will influence a few
    sections of the audit sampling.
    The first phase begins with application where auditor decides the importance of sampling and
    consider whether the tests are intended to obtain evidence of control effectiveness ,
    substantive assurance or double reason, and whether the test is to be the essential source of
    evidence about the assertion , or one of a several tests of the assertion . Secondly, is planning
    phase where the auditor also chooses whether to perform statistical or non-statistical
    sampling only after they had determine test objective define misstatements. These methods
    depend on the firm methodology, nature of account , and desired level of assurance. Plus,
    during the planning stage the auditor also decides on the sample size that depends of expected
    and tolerable errors. Next, during the performance phase which is a critical part where audit
    procedures been done on the sample items and lastly the evaluation phase where the sample
    results been evaluated by determining the causes of errors and consider the sampling risk.

    Relevant Findings On Methods


    Based on the review and summarize of this article, there are many questions and issues being
    raised regarding the methods used in the audit sampling process and those questions had been
    answered and discussed with relevant findings that we gained by reading this article.

    First and foremost, factors that influence auditor’s decisions to use audit sampling is when
    the population is large and homogenous where sampling may help to achieve accuracy and
    conclusion about the population example for search of unrecorded liabilities or inventory
    where statistical or non-statistical methods may be used to evaluate the samples, however,
    based on researches conducted, non-statistical methods were used in 85 percent of sampling
    applications. Next, question was raised regarding the comparisons of effectiveness between
    statistical and non-statistical sampling, and based on the findings in this article, it stated that
    PCAOB indicates that non-statistical sampling is more comparable and the sample size
    results from effectively designed statistical sample. Morever , by 1990s more large firms use
    non-statistical sampling and there are few factors that cause statistical sampling to be less
    preferable due to increase emphasis on inherent risk and poor linkage between applied audit
    sampling and traditional sampling. Furthermore, the article also discusses on the factors in
    determining sample size to ensure accuracy where for test of control( regardless of statistical
    or non-statistical sampling) the sample size depends on the degree of assurance required and
    the expected and tolerable deviation rate while for test of balance the sample size depends on
    dollar amount of populations, tolerable misstatements and risks. Last but not least, the most
    important issue that arises regarding audit sampling is during the critical part of audit
    sampling which is when performing the audit procedure. So, this article questions on the
    effectiveness of audit teams in detecting errors and based on few researches, it stated that
    auditors fail to detect 45 percent of errors in the sample and this may touches on tasks
    experience where less experience members may cause more failure in detecting errors
    therefore it been suggested that more focus should be given to inexperience members since
    they might not familiar with audit programs used.
    Although, this article had explained and justified clearly regarding audit sampling along with
    discussion of few issues but there are still many questions that need further research to justify
    it such as factors that effected the type of tests performed by auditors, effectiveness of
    auditors in projecting misstatement and how different locations and systems effected the way
    audit sampling is planned. In conclusion, more academic researches are needed to examine
    the extent to which sampling methods are effective in different situations.

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