In short
In substantive sampling, misstatements found in the sample are projected to the whole population. The projected misstatement, plus an allowance for sampling risk, is compared with tolerable misstatement.
Key takeaways
- Projection methods include the ratio method and the difference method.
- In monetary unit sampling, each error's tainting percentage is applied to its sampling interval.
- If the result exceeds tolerable misstatement, the auditor extends testing or asks management to investigate and adjust.
Where it's tested
AUD: Audit Sampling — study notes, a five-minute revision sheet and practice questions.
Practise: 3 questions
Question 1 of 3 · 0 answered
An auditor samples items with a total book value of $100,000 and finds $2,000 of overstatements. The population's total book value is $1,000,000. Using the ratio approach, what is the projected misstatement?