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Definition
| An inherent part of sampling that results from testing less than the entire population. |
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Definition
Occurs when audit tests do not uncover errors that exist in the sample. Can result from:
1. Auditor's failure to recognize exceptions, or
2. Inappropriate or ineffective audit procedures. |
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Definition
| Characteristic being tested for in a population. |
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| Occurs when the attribute being tested for is absent. |
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| The investigation of individual exceptions to determine the cause of the breakdown in internal control. |
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Definition
(Acceptable risk of assessing control risk too low)
The risk that the auditor is willing to take of accepting a control as effective or a rate of monetary misstatements as tolerable when the true population exception rate is greater than the tolerable exception rate. |
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Definition
| A statistical, probablistic method of sample evaluation that results in an estimate of the proportion of items in a population containing a characteristic or attribute of interest. |
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Definition
| Testing less than 100% of a population for the purpose of making inferences about that population. |
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Definition
A nonprobabilistic method of sample selection in which a selection of several items are picked in sequence.
Ex. Thus to select 5 blocks of 20 invoices, one would select one invoice and the block would be that invoice plus 19. This would be repeated 4 more times. |
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Definition
(Computed upper exception rate)
The upper limit of the probable population exception rate; the highest exception rate in the population at a given ARACR (acceptable risk of assessing control risk too low). |
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| Directed Sample Selection |
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Definition
| A nonprobabilistic method of sample selection in which each item in the sample is selected based on some judgmental criteria established by the auditor. |
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Definition
(Estimated population exception rate)
Exception rate the auditor expects to find in the population before testing begins. |
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Definition
| The % of items in a population that include exceptions in prescribed controls or monetary correctness. |
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| Haphazard Sample Selection |
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Definition
| A non-probabilistic method of samle selection in which items are chosen without regard to thier size, source, or other distinguishing characteristics. |
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Definition
| Sample size determined by professional judgment (non-statistical sampling) or by statistical tables (attribute sampling). |
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| Nonprobabilistic Sample Selection |
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Definition
| A method of sample selection in which the auditor uses professional judgment to select items from the population. |
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Definition
| The risk that the auditor fails to identify existing exceptions in the sample; nonsampling risk (nonsampling error) is caused by failure to recognize exceptions and by inappropriate or ineffective audit procedures. |
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Definition
| The auditor's use of professional judgement to select sample items, estimate the population values, and estimate sampling risk. |
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| Probabilistic Sample Selection |
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Definition
| A method of selecting a sample such that each population item has a known probability of being included in the sample and the sample is selected by a random process. |
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Definition
| A sample in which every possible combination of elements in the population has an equal chance of constituting the sample |
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Definition
| A sample with characteristics the same as those of the population. |
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Definition
(Sample Exception Rate)
= Number of exceptions in the sample
Sample Size |
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Definition
| A frequency distribution of the results of all possible samples of a specified size that could be obtained from a population containing some specific parameters. |
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Definition
| Risk of reaching an incorrect conclusion inherent in tests of less than the entire population because the sample is not representitive. |
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Definition
| The use of mathematical measurement techniques to calculate formal statistical results and quantify sampling risk |
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Term
| Systematic Sample Selection |
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Definition
| A probabilistic method of sampling in which the auditor calculates an interval (the population size/ number of sample items desired) and selects the items for the sample based on the size of the interval and a randomly selected starting point between zero and the length of the interval. |
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Definition
(Tolerable Exception Rate)
The exception rate that the auditor will permit in the population and still be willing to conclude the control as operation effectively and/or the amount of monetary misstatements in the transactions established during planning is acceptable. |
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Term
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Definition
| An element in the population can be included in the sample more than once if the random number corresponding to that element is selected more than once. |
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