Variables Sampling

Question 1

Variables sampling relies heavily on …? (hint: statistical graph)

Answer 1

BELL CURVE

Question 2

When performing statistical sampling- auditors usually use what method?

Answer 2

Random sampling

Question 3

T/F: For variable sampling, you cannot use tables, you have to actually calculate the sample size?

Answer 3

True

Question 4

What are the four factors that an auditor has to consider when performing the calculation for sample size?

Answer 4

1) Estimated population standard deviation
2) Tolerable misstatement (precision)- also called the “allowance for sampling risk”
3) Risk of incorrect acceptance (type II)- (1-Confidence Level)
4) Population size- now considered explicitly

Question 5

What is the basic formula for determining the sample size?

Answer 5

n= (S * Z-coefficient * N/A)^2
n= Sample Size 

N= Size of population

S= Estimated population standard devision

Z-Coefficient= level of confidence

A= tolerable misstatement

Question 6

What is stratification?

Answer 6

Breaking the population into several groups of relatively similar items (small, medium, large items)