What type of sampling method used in substantive testing?
Variable sampling is used in substantive testing. Variable sampling will be used as a quantitative measure for estimating dollar values balances. The other type of sampling is attribute sampling, and that will be primary used in test of controls.
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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.
How to interpret tolerable deviation rate vs actual deviation rate in controls testing?
It is important to understand how control risk factors into the amount of substantive testing that the audit team must perform. As you can see in the visual below, if control risk is higher (as well as inherent risk), that means that the audit team cannot really rely on internal controls to prevent or detect […]