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This Audit Guide provides the latest information on the use of audit sampling. It reflects changes in sampling brought about by the risk assessment standards (SAS Nos. 104-111). This edition of the guide has been conformed to reflect the Defining Professional Requirements standard (SAS No. 102), and includes guidance on audit documentation (SAS 103), and communicating internal control related matters (SAS 112). This guide also includes expanded guidance on the application of sampling to tests of controls and substantive test of details, including determining the sample size and evaluating sample results, as well as guidance on following nonstatistical and statistical audit sampling approaches. This edition is a substantive revision to the 2001 guide.
The guide summarizes applicable requirements and practices, and delivers "how-to" advice for audit sampling. The included case studies illustrate the use of different sampling methods in real world situations. The appendices include sampling tables, testing considerations, and a comparison of the key provisions of the risk assessment standards.
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I.7 Two other SAPs included references to sampling applications in auditing. SAP No. 33, Auditing Standards and Procedures (a codification), issued in 1963, indicated that a practitioner might consider using statistical sampling in appropriate circumstances. SAP No. 36, Revision of "Extensions of Auditing Procedure" Relating to Inventories, issued in 1966, provided guidance on the auditor's responsibility when a client uses a sampling procedure, rather than a complete physical count, to determine inventory balances.
I.8 From 1967 to 1974, the AICPA published a series of volumes on statistical sampling, An Auditor's Approach to Statistical Sampling, for use in continuing professional education. In 1978, the AICPA published Statistical Auditing, by Donald M. Roberts, explaining the theory underlying statistical sampling in auditing.
I.9 In 1981, the AICPA's Auditing Standards Board (ASB) issued Statement on Auditing Standards (SAS) No. 39, Audit Sampling (AICPA, Professional Standards, vol. 1, AU sec. 350), which provides general guidance on both nonstatistical and statistical sampling in auditing and superseded appendixes A and B of SAS No. 1, Codification of Auditing Standards and Procedures (AICPA, Professional Standards, vol. 1). In 1983, the AICPA published the first edition of this Audit Guide Audit Sampling. In 2001, the AICPA published an updated version of the guide.
I.10 In 2006, the ASB issued a suite of eight risk assessment standards (SAS Nos. 104-111) to be used in the planning and performance of a financial statement audit. Several of these pronouncements also provide guidance on the use of audit sampling. SAS No. 107, Audit Risk and Materiality in Conducting an Audit (AICPA, Professional Standards, vol. 1, AU sec. 312), provides guidance on the auditor's consideration of audit risk and materiality when planning and performing an audit of financial statements in accordance with GAAS. Audit risk and materiality are important in determining the nature, timing, and extent of auditing procedures (including those that involve audit sampling) and evaluating the results of those procedures. SAS No. 109, Understanding the Entity and Its Environment and Assessing the Risks of Material Misstatement (AICPA, Professional Standards, vol. 1, AU sec. 314), and SAS No. 110, Performing Audit Procedures in Response to Assessed Risks and Evaluating the Audit Evidence Obtained (AICPA, Professional Standards, vol. 1, AU sec. 318), clarify the circumstances under which controls can be relied on and the importance of IT general controls and tests of controls as a basis for reliance. The AICPA also issued the Audit Guide Assessing and Responding to Audit Risk in a Financial Statement Audit to provide guidance on obtaining an understanding of the entity and its environment, including its internal control, assessing the risks of material misstatement, designing further audit procedures that respond to the assessed risks, and evaluating audit findings and evidence. In discussing the auditor's assessment of control risk, the preceding guidance describes the manner in which the auditor designs, performs, and evaluates tests of controls, including those that involve audit sampling.
I.11 Included in the suite of risk assessment standards is an amendment to AU section 350: SAS No. 111, Amendment to Statement on Auditing Standards No. 39, Audit Sampling (AICPA, Professional Standards, vol. 1). SAS No. 111 moved the discussion of the audit risk model from AU section 350 to AU section 312. In addition, the SAS indicated that nonstatistical sample sizes ordinarily would be comparable to statistically determined sample sizes for similar parameters.
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