Application of Statistical Sampling to Auditing and Accounting

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Addis Ababa


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