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A representative sample.
Tolerable error.
TWO methods of selecting a representative sample.Can you kindly explain them as i didn’t found them in the lectures…
Regards,
Bazil
Really appreciate your guys help passed 5 of my exam through open tuition and now preparing for the next 2
Just to clarify for visitors to this forum, we do not hold out our lectures and notes to cover absolutely everything that might be mentioned in an exam – so absolutely fine to ask about things you come across in question practice.
s.3 of Chapter 11 in our notes describes the 6 main selection methods – pointing out that haphazard and block are unlikely to be representative.
You should also find as much detail as you need on anything for AA in the Study Hub – Chapter 19 on Audit Sampling is particularly good.
That said, I should like to know where you are seeing the term “tolerable error” because the correct terms are now “tolerable misstatement” (for a substantive test of details) and “tolerable rate of deviation” (for a test of controls). Basically, its the misstatement/deviation rate (“error”) that the auditor is prepared to accept in the sample and still conclude that the population is not materially misstated.
In layman’s terms (not to be quoted to the examiner):
“If I find errors amounting to less than $50k in this sample of invoices, I will be happy to conclude that the population of invoices is not materialy misstated.”
thank you soo much! i found the term tolerable error on study hub practice question
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