ACCT 475 Lecture 11: ACCT 475 – Lecture 11

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amaranthjackal733

16 Jan 2018

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Document Summary

Chapter 6: sampling and overview of the risk response phase of the. Sampling is required whenever the auditor does not test an entire group of transactions or all items in a balance (cas 530) In many cases, there are too many items to test, or auditor decides that it is not necessary to test all items. Sample of items tested should be representative of the population. Examples: medical sampling blood sample (don"t drain your entire blood stream!) In terms of controls (do they work or not work?) correct. In some cases you don"t need to sample if your client has only 6 customers (6 a/r), test all 6! In you were auditing a bank with thousands of loans from customers then it makes sense to take a sample. Sampling risk is the risk that the sample chosen by the auditor is not representative of the population available for testing, and causes the auditor to arrive at an inappropriate conclusion.

Related Questions

Which of the following statements is most correct regarding the independent auditor's reliance on the tests of controls performed by the internal auditors to reduce their substantive testing?

1-The independent auditor must obtain assurance of the independence of the internal auditors but need not test their work.

2-It is not acceptable for the independent auditor to rely upon the work of the internal auditors.

3-There are no restrictions in relying upon the work of internal auditors.

4-The independent auditor must evaluate the competency and objectivity of the internal auditors and must test a sample of the work of the internal auditors in order to rely upon their work.

The term "materiality" as used in auditing is best described as the

1-substance of the auditing procedures.

2-amount of misstatement on the financial statements that would influence a decision maker.

3-underlying evidence upon which the audit opinion is based.

4-amount of material the auditor gathers as evidence to support the audit opinion.

Prior to accepting an audit client an auditor has a professional obligation to

1-contact the predecessor auditor.

2-perform preliminary analytical review procedures.