Site MapHelpFeedbackKey Terms
Key Terms
(See related pages)


Allowance for sampling risk (ASR, precision)  An interval around the sample results in which the true population characteristic is expected to lie.
Attributes sampling  A sampling plan enabling the auditors to estimate the rate of deviation (occurrence) in a population.
Deviation rate  A defined rate of departure from prescribed controls. Also referred to as occurrencerate or exception rate.
Difference estimation  A sampling plan that uses the difference between the audited (correct) values and book values of items in a sample to calculate the estimated total audited value of the population. Difference estimation is used in lieu of ratio estimation when the differences are not nearly proportional to book values.
Discovery sampling  A sampling plan for locating at least 1 deviation, providing that the deviation occurs in the population with a specified frequency.
Dual-purpose test  A test designed to test a control and to substantiate the dollar amount of an account using the same sample.
Estimated total audited value  Based on the variables sampling method used (e.g., mean-per-unit, ratio, difference) and the sample selected, the most likely point estimate of the account audited value.
Expected population deviation rate  An advance estimate of a deviation rate. This estimate is necessary for determining the required sample size in an attributes sampling plan.
Mean  The average item value, computed by dividing total value by the number of items composing total value.
Mean-per-unit estimation  A classical variables sampling plan enabling the auditors to estimate the average dollar value (or other variable) of items in a population by determining the average value of items in a sample.
Nonsampling risk  The aspects of audit risk not due to sampling. This risk normally relates to "human" rather than "statistical" errors.
Physical representation of the population  The population from which the auditors sample. The physical representation of the population differs from the actual population when it does not include items that exist in the actual population. For example, the auditors sample from a trial balance of receivables which may or may not include all actual receivables.
Population  The entire field of items from which a sample might be drawn.
Precision  See allowance for sampling risk.
Probability-proportional-to-size sampling  A variables estimation procedure that uses attributes theory to express a conclusion in monetary (dollar) amounts.
Projected misstatement  An estimate of the most likely amount of monetary misstatement in a population.
Random selection  Selecting items from a population in a manner in which every item has an equal chance of being included in the sample.
Ratio estimation  A sampling plan that uses the ratio of audited (correct) values to book values of items in the sample to calculate the estimated total audited value of the population. Ratio estimation is used in lieu of difference estimation when the differences are nearly proportional to book values.
Reliability  The complement of the risk of incorrect acceptance.
Representative sample  A sample possessing essentially the same characteristics as the population from which it was drawn.
Risk of assessing control risk too high  This risk is the possibility that the assessed level of control risk based on the sample is greater than the true operating effectiveness of the control.
Risk of assessing control risk too low  This most important risk is the possibility that the assessed level of control risk based on the sample is less than the true operating effectiveness of the controls.
Risk of incorrect acceptance  The risk that sample results will indicate that a population is not materially misstated when, in fact, it is materially misstated.
Risk of incorrect rejection  The risk that sample results will indicate that a population is materially misstated when, in fact, it is not.
Sampling error  The difference between the actual rate or amount in the population and that of the sample. For example, if an actual (but unknown) deviation rate of 3 percent exists in the population, and the sample's deviation rate is 2 percent, the sampling error is 1 percent.
Sampling risk  The risk that the auditors' conclusion based on a sample might be different from the conclusion they would reach if the test were applied to the entire population. For tests of controls, sampling risks include the risks of assessing control risk too high and too low; for substantive testing, sampling risks include the risks of incorrect acceptance and rejection.
Sequential (stop-or-go) sampling  A sampling plan in which the sample is selected in stages, with the need for each subsequent stage being conditional on the results of the previous stage.
Standard deviation  A measure of the variability or dispersion of item values within a population; in a normal distribution, 68.3 percent of all item values fall within 1 standard deviation of the mean, 95.4 percent fall within 2 standard deviations, and 99.7 percent fall within 3 standard deviations.
Stratification  Dividing a population into two or more relatively homogeneous subgroups (strata). Stratification increases the efficiency of most sampling plans by reducing the variability of items in each stratum. The sample size necessary to evaluate the strata separately is smaller than would be needed to evaluate the total population.
Systematic selection  The technique of selecting a sample by drawing every nth item in the population, following one or more random starting points.
Tolerable deviation rate  The maximum population rate of deviations from a prescribed control that the auditor will tolerate without modifying the planned assessment of control risk.
Tolerable misstatement  An estimate of the maximum monetary misstatement that may exist in an account balance without causing the financial statements to be materially misstated.
Variables sampling  Sampling plans designed to estimate a numerical measurement of a population, such as a dollar value.
Voucher  A document authorizing a cash disbursement. A voucher usually provides space for the initials of employees performing various approval functions. The term voucher may also be applied to the group of supporting documents used as a basis for recording liabilities or for making cash disbursements.







Principles of AuditingOnline Learning Center

Home > Chapter 9 > Key Terms