Scribd
Upload
31 views

Sample Size For Substantive Tests

An increase in inherent risk, control risk, the auditor's required confidence level, expected error, or the monetary value of the population would require a larger sample size. A decrease in tolerable error or the stratification of a population when appropriate would allow for a smaller sample size. For large populations, the actual population size has little effect on sample size, but for small populations alternative procedures may be more efficient than sampling.

Uploaded by

akira samonte
Copyright
© © All Rights Reserved
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
31 views

Sample Size For Substantive Tests

An increase in inherent risk, control risk, the auditor's required confidence level, expected error, or the monetary value of the population would require a larger sample size. A decrease in tolerable error or the stratification of a population when appropriate would allow for a smaller sample size. For large populations, the actual population size has little effect on sample size, but for small populations alternative procedures may be more efficient than sampling.

Uploaded by

akira samonte
Copyright
© © All Rights Reserved
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
You are on page 1/ 2

An increase in the auditor’s assessment of inherent risk and control risk = The auditor’s

assessment of the risk of material misstatement is affected by inherent risk and control risk.
Therefore the higher the auditor’s assessment of the risk of material misstatement, the larger
the sample size needs to be, that’s why the effect of inherent risk and control risk on sample
size is increase.

An increase in the use of other substantive procedures directed at the same financial
statement assertions. = The more the auditor is relying on other substantive procedures to
reduce to an acceptable level the detection risk regarding a particular population, the less
assurance the auditor will require from sampling and, therefore, the smaller the sample size
can be.

An increase in the auditor’s required confidence level = The greater the level of assurance that
the auditor requires that the results of the sample are in fact indicative of the actual amount of
misstatement in the population, the larger the sample size needs to be.

An increase in the total error that the auditor is willing to accept (tolerable error) = the effect
of on sample size is decrease because the lower the tolerable misstatement, the larger the
sample size needs to be.

An increase in the amount of error the auditor expects to find in the population (expected
error). = there are factors relevant to the auditor’s consideration of the expected misstatement
amount include the extent, to which item values are determined subjectively, the results of risk
assessment procedures, the results of tests of control, the results of audit procedures applied in
prior periods, and the results of other substantive procedures. Therefore the greater the
amount of misstatement the auditor expects to find in the population; the larger the sample
size needs to be in order to make a reasonable estimate of the actual amount of misstatement
in the population.

Stratification of the population when appropriate = When there is a wide range in the
monetary size of items in the population, it may be useful to stratify the population. When a
population can be appropriately stratified, the aggregate of the sample sizes from the strata
generally will be less than the sample size that would have been required to attain a given level
of sampling risk, had one sample been drawn from the whole population.

The number of sampling units in the population= For large populations, the actual size of the
population has little, if any, effect on sample size. Thus, for small populations, audit sampling is
often not as efficient as alternative means of obtaining sufficient appropriate audit evidence.

However, when using monetary unit sampling, an increase in the monetary value of the
population increases sample size, unless this is offset by a proportional increase in materiality
for the financial statements as a whole and, if applicable, materiality level or levels for
particular classes of transactions, account balances or disclosures.

You might also like