What does audit sampling mean on the CPA exam?
Audit sampling. Selecting and evaluating less than 100% of a population of audit relevance so the sample is expected to be representative, giving a reasonable basis for conclusions about the whole population. Selecting specific items is not sampling: the conclusion stops at the items tested.
Defined against AU-C 530.05, 330.A72.
Which CPA exam sections use audit sampling?
Audit sampling appears in the AUD section of the CPA exam.
Other terms defined against AU-C 530
- tolerable misstatement: A monetary amount set so that the risk of the actual misstatement in the population exceeding it is acceptably low.
Related terms
- selecting specific items: Choosing particular items to examine because of what they are, such as large or unusual ones, rather than at random.
- reasonable basis: The lowest standard at which a return position may be taken without penalty if it is disclosed.
- audit evidence: Everything the auditor uses to reach a conclusion, including the accounting records and anything corroborating them.
- audit committee: A subcommittee of the board of directors that oversees financial reporting and the external audit.
- allowance for credit losses: The amount set aside for receivables not expected to be collected, estimated over the whole expected life of the asset rather than only once a loss is probable.
- sufficient appropriate audit evidence: Enough evidence, of the appropriate kind.