Question

Briefly describe advantages and disadvantages of the monetary unit sampling (MUS).

Answer 1

Monetary Unit Sanpling ( MUS ), Also known as probability proportional to sizw or dollar unit sampling method used to determine if the account balances or monetrary amounts in a population contain any misstatements

Advantages

1. Genarally simpler to use than classical variable sampling

2. Effective for overstatement errors

3.Results in smaller sample sizes

4. Includes transactions or components reflecting larger dollar amounts

Disadvantages

1.Requires special consideration for accounts with zero or negative balances

2.Not effective for understatement or omission errors

3.Expanding an MUS sample is difficult if the initial conclusion is to reject account balance.

4.Provides a conservative estimate of misstatement.