Application Of Statistical Sampling To Auditing And Accounting

An inquiry anses In applying sampling techniques to auditing. Why dornauditors sample? Possible reasons may be:rn• When the nature and materiality of the balance or class ofrntransactions does not demand a 100 percent checking.rn• When a decision must be made about the ba lance or class ofrntransactions.rn• When the time and cost to audit 100 percent of the population wouldrnbe so great.rn• A 100 percent checking does not in general guarantee a definiternassurance.rnTherefore, auditors use sampling because they need to perform efficientrnaudits on a timely basis and cost effectively where they can not do 50 byrnauditing 100 percent.rnThis paper was designed to show the advantages of applying statisticalrnsampling methods in the field of auditing. Using a population of knownrncharacteristics the study was conducted to see how good the total values arernestimated.rnRepeated samples of same size were taken from unstratified and stratifiedrndesigns, and sampling with probability proportional to monetary size (PPMS).rnusually called Monetary or Dolla r Unit Sampling. The size of the sample wasrncomputed using sample size computational formula for each design with thernobjective of attaining the same planned e rror margin and same relia bilityrnlevel for the entire study. From the first two designs the mean per unit,rndifference and ratio estimators were considered. The audit objective assumedrnwas to check whether the recorded boo,k valu...e was fairly stated. The audit

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