Explain why auditor’s still use sampling techniques despite the uncertainties that are inherent in audit conclusions drawn on samples.

Audit sampling involves applying an audit procedure to less than 100 percent of the population for
the purpose of evaluating some characteristics of the population. The fact that an audit involves
sampling is noted in the scope paragraph of the auditor’s report, which contains the phrase “An
audit includes examining, on a test basis.” When an auditor uses sampling, an element of
uncertainty enters into the auditor’s conclusions.
Required:
a) Explain why auditor’s still use sampling techniques despite the uncertainties that are
inherent in audit conclusions drawn on samples.
b) As an auditor what will be your justification for using statistical sampling instead of nonstatistical
sampling in auditing account receivables. Give three justifications
c) Outline five quality control procedures the auditor may implement to ensure that the
auditors work is of standards.
d) You overheard the following comments during a conversation between Auditor Kaakaba
and Auditor Kasanga about a specific sampling application.
i. “Using non-statistical sampling is so much easier than using statistical sampling.
Statistical sampling requires far too many judgments. Under non-statistical
sampling, I can just pick items, evaluate them, and make my decision.”
ii. “I wish non-statistical sampling were allowable in generally accepted auditing
standards audits. In some cases, the additional time required by statistical sampling
just isn’t worth the benefits.”
iii. “Once we control the sampling risk, we’re home free. Assuming we select a
representative sample, there’s nothing else that we need to worry about.”
iv. “Be careful if you try to set sampling risk at too low a level. You will need to select
more items, which will increase the amount of audit time.”
v. “Those transactions with Wimbey are always so difficult to audit. Let’s exclude
them from our sampling frame. We can pick other items and have a sufficiently
large sample to meet generally accepted auditing standards.”
vi. “I’m about to perform a walkthrough on Flushing’s processing of sales transactions
to understand their nature. What level of sampling risk should I consider in planning
my sample of transactions?”
Required:
With reference to appropriate professional standards and practices state whether each of the
above statements is valid or not a valid and why you think so. Your responds must be very
brief.

 

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