Case 11: Sampling for Variables – Difference Estimation
Case 11: Sampling for Variables – Difference Estimation
Answer the following questions below. Use your text and other available resources to provide
well-reasoned responses.
1) Carole Mitchell attempted to use judgmental sampling to verify the client’s accrual in this case while Dan Cline opted for statistical sampling. What are the advantages and disadvantages of each approach? Will a statistical sample usually be smaller than a non-statistical sample?
2) Exhibit 11-2 presents the results of Mitchell’s initial testing. Was Cline correct in seeking additional audit evidence? Include in your answer the concept of sufficiency of audit evidence.
3) Statistical sampling is occasionally criticized for preventing the auditor from introducing personal judgment into a particular test. Is this assertion valid? How much knowledge of statistical sampling should the auditor have? Is it typical to obtain assistance from a specialist in developing a sample?
4) Statistical sampling has also been criticized for being a slow, time-consuming process relative to judgmental sampling. Is this assertion valid?
5) An auditor may utilize sampling for attributes in some tests and sampling for variables in others. How is the decision made as to which of these methods should be applied? Is it appropriate to use a cost-based decision when considering the independent auditors’ responsibility?
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