# What factors are considered when determining the sample size in attribute testing for internal controls?

Attribute sampling is used for internal controls and we focus on determining whether the control is operating effectively or not. Attribute sampling would focus on yes or no type attributes. There are a variety of things to consider when determining the sample size (amount of instances to test) in attribute sampling:

Reliance on controls – How reliant is the audit team on the company’s internal controls.

Tolerable deviation rate – What is the acceptable level of deviation rate in the population (i.e., how similar or dissimilar are items on a population).

Expected population deviation rate – Before we perform any testing, what is our expectations of the population deviation rate (similar to above).

One aspect that we are not concerned about is the tolerable misstatement as that would be considered when determining the sample size for substantive testing.

## You might also be interested in...

• ### CECL Excel Workbook

If you would like to use the Excel workbook that was used to create the Universal CPA lecture on CECL for debt securities, please click the link below to download the Excel workbook: CECL Calculation workbook (Universal CPA Review)

• ### Journal Entry for Direct Materials Variance

Journal Entry for Direct Materials Variance In the current year, Mission Burrito budgeted 6,000 pounds of production and actually used 4,000 pounds. Material cost was budgeted for \$5 per pound and the actual cost was \$8 per pound. What would the debit or credit to the direct material efficiency variance account be for the current...

• ### Understanding Variance Analysis

Variance Analysis Variance analysis is a method for companies to compare its actual performance vs its budgeted amount for that cost measurement (related to the flexible budget). The differences between the standard (budgeted) amount of cost and the actual amount that the organization incurs is referred to as a variance. By analyzing variances, the company...