Application of Statistical Sampling to Auditing and Accounting
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Date
1999
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Publisher
Addis Ababa
Abstract
An inquiry anses In applying sampling techniques to auditing. Why do
auditors sample? Possible reasons may be:
• When the nature and materiality of the balance or class of
transactions does not demand a 100 percent checking.
• When a decision must be made about the ba lance or class of
transactions.
• When the time and cost to audit 100 percent of the population would
be so great.
• A 100 percent checking does not in general guarantee a definite
assurance.
Therefore, auditors use sampling because they need to perform efficient
audits on a timely basis and cost effectively where they can not do 50 by
auditing 100 percent.
This paper was designed to show the advantages of applying statistical
sampling methods in the field of auditing. Using a population of known
characteristics the study was conducted to see how good the total values are
estimated.
Repeated samples of same size were taken from unstratified and stratified
designs, and sampling with probability proportional to monetary size (PPMS).
usually called Monetary or Dolla r Unit Sampling. The size of the sample was
computed using sample size computational formula for each design with the
objective of attaining the same planned e rror margin and same relia bility
level for the entire study. From the first two designs the mean per unit,
difference and ratio estimators were considered. The audit objective assumed
was to check whether the recorded boo,k valu...e was fairly stated. The audit