Document ID: chunk:federal_register_of_legislation:F2021C01255:body:0:p13
Version: federal_register_of_legislation:F2021C01255
Segment Type: other
Provision Reference: 
Character Range: 35055–38295

Decrease               The lower the tolerable misstatement, the larger the sample size needs to be.

  5.        An increase in the amount of misstatement the auditor expects to find in the population                                                        Increase               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.  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.

  6.        Stratification of the population when appropriate                                                                                              Decrease               When there is a wide range (variability) 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.

  7.        The number of sampling units in the population                                                                                                 Negligible effect      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 report as a whole [and, if applicable, materiality level or levels for particular classes of transactions, account balances or disclosures]).

Appendix 4

(Ref: Para. A13)

Sample Selection Methods

There are many methods of selecting samples.  The principal methods are as follows:

    (a)                Random selection (applied through random number generators, for example, random number tables).

    (b)               Systematic selection, in which the number of sampling units in the population is divided by the sample size to give a sampling interval, for example 50, and having determined a starting point within the first 50, each 50th sampling unit thereafter is selected.  Although the starting point may be determined haphazardly, the sample is more likely to be truly random if it is determined by use of a computerised random number generator or random number tables.  When using systematic selection, the auditor would need to determine that sampling units within the population are not structured in such a way that the sampling interval corresponds with a particular pattern in the population.

    (c)                Monetary Unit Sampling is a type of value-weighted