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  • What type of sampling method is used for controls testing?

    Attribute sampling will be used primarily for testing internal controls. Attribute sampling will test for seeking specific characteristics. The other type of sampling is variable sampling, which is used for substantive testing.

  • What is sampling risk?

    Sampling risk is considered the risk that the sample will not represent the actual population. When conducting tests based on samples, the assumption is that the sample is indicative of the entire population. The auditor should apply professional judgment in assessing sampling risk. In performing substantive tests of details, the auditor is concerned with two aspects of sampling risk: Risk of incorrect acceptance/ risk of incorrect rejection and the risk of assessing control risk too low/ risk of assessing control risk too high.

  • What is risk of incorrect acceptance in audit sampling?

    Risk of incorrect acceptance is the risk that the sample allows the auditor to conclude that financial statements are not materially misstated, when in fact they actually are. This will affect the effectiveness of the audit detecting existing material misstatements.