Question

A. Provide your answers to the following questions regarding sampling:

1. List the steps involved in attribute sampling.

2. What is meant by "sampling risks" and what is its impact on audit findings?

3. Identify and define the factors that affect the size of an attribute sample.

4. Explain how the purpose of statistical sampling in tests of monetary values differ from the purpose of statistical sampling in tests of control activities.

B. Discuss a situation within Payroll or Accounts Payable where data analytics could be used by an Internal Auditor. Briefly describe the information to be analyzed and what potential results would be expected? (How would the population of data be defined? What controls is being tested? What additional testing beyond data analytics, if any, would be required to reach an audit conclusion?)

Answer 1

1. The steps involved in attribute sampling are:

a. Define the population and attribute to be checked.

b. Collect samples from the population using some standard sampling technique.

c. Analyze the data for selected attribute whether it is present or not.

d. Give conclusion for the whole population.

2. Sampling risks refers to the risk of selection of samples which may not be representative of the population. It impacts audits as it may lead to following erroneous conclusion:

a. That there is material statement while there is not

b. that there is no material misstatement while there is.

3. Factors that define audit sample:

a. Size of population and proportion of sample i.e., the sample percentage

b. Margin of error

c. Confidence level