Question

The public have a very strong perception towards auditors. There has been instances where Fraud wasn't caught by Auditors.

A misconception is the idea that any error eventually uncovered concerning a transaction should have been caught by the auditors. This may, or may not be the case. The defining factor is determing whether that specific transaction was selected.

Discuss the impact sampling has on an auditor's conclusion. Consider testing a specific account balance, and whether or not auditors select 100% of the population all the time, or not. Consider the auditor's opinion, and how sampling plays a critical role in the auditor's approach and in their ability to opine on a set of financial statements.

Answer 1

Answers

The objective of the auditor when using sampling is to provide a reasonable basis for the auditor to draw conclusions about the population from which the sample is selected.audit sampling refers to tha application of audit procedures to less than 100% of transactions.

The risk that the auditors conclusions based on sample may be diffrent from the conclusion.if the entire population may subjected to same audit procedures ,sampling risk can lead to two types of eroneous conclusions

a.in tha case of test of control that controls are some more effective than they actually are , or in the case of test of detailes , that a material misstatement does not exist when in fact it does.

b.In tha case of test of controls, that control are less effective than they actually are , or in the case of test of detailes ,that a materila misstatement exist when it fact it does not this type of erroneous conclusion affects audit efficiency as it would usually leads to additional work to establish that initial conclusions were incorrect