Practical Approach to Calculate Sample Size in Auditing - Audit Sampling Simplified

[@AjayGupta-sn8oi]

Thankyou for sharing these kind of knowledge

[@efiwecpa]

Thanks for your comment!

[@0xxsapxx0]

i love how all your videos are crisp and to the point, thanks a ton for saving the lives of auditors😉 Just a quick question, after sample size is determined i can take the high value items and RP items within this 66 samples or we test them seperately?

[@efiwecpa]

After the sample size is determined assuming its 40 sample size then you take these 40 samples from the GL and test them separately from the high value items.

[@juliusiha4409]

Thank you for sharing this knowledge. We'll explained.

[@efiwecpa]

Thanks 🙏

[@harshitbhateja7568]

I didn’t get how did we attain risk factor of 3 and my firm does not have any fixed risk factor. Kindly help with this I need to start my audit procedure. P.s. I just love your videos. Big fan ma’am.

[@ratankirdolia11]

Thanks for the video. It was really helpful. Request you please to have a video on determining risk factor.

[@hasinarafenoarisoa3747]

Thank you for this video! I don't understand about the calculation of Total High value items and less key items and the importance of residual population, please?

[@efiwecpa]

Because we cannot test the whole population in the GL during the audit, we have to select samples and test these samples. Before we select the samples from the general ledger we have to identify all the high value items in the GL. That is why we have the high value threshold so we can select any item that meets the threshold. The purpose of doing this is to reduce the total number of items that will be tested. Once you have selected all the high value items then you will be left with the residual or remaining population. From this remaining population you will then select items at random for testing. If you don't remove the high value items from the total population then your sample size can be as large as 100. But by deducting the high value items from the total population you can reduce ur sample size to as low as 60.

[@amadurrehman849]

if risk of material misstatement in any line item is low and we are not performing any analytical procedures then what will be our risk factor ?

[@ireneahadja4071]

Can you please explain how to calculate the sample size for payroll auditing

[@ptyt1570]

great video - can this sample size calculation approach be applied to AR, expense, AP, etc? or is there limitation? For small sample size

[@efiwecpa]

The sample size calculation can be applied to all financial statement line items. Like AR, AP. Also, even if the sample population is less than 50, you can still use this approach.

[@amadurrehman849]

Can we get this sheet as template for calculating sample size ?

[@atiqchowdhury4765]

Thank you so much for this wonderful video. By the way, is there any range for the 'risk factor'? Like 1 to 3 or something like that? For instance, the range of probability is 0 to 1.

[@efiwecpa]

The range is usually between 1 to 3 With 1 being Low risk, 2 Moderate risk and 3 High risk

[@atiqchowdhury4765]

@@efiwecpa Thank you so much for the reply.

[@dollyjain2768]

Are these 66 samples out of 100 or what what are the total transactio s

[@igorvorobjov]

Do you have a video about extrapolation of results of that procedure? Will it be right to extrapolate results of haphazard sampling if it's not a statistical method of sampling?

[@efiwecpa]

Thanks for your comment. I don't hv a video yet on extrapolation. I believe we have to extrapolate the error even if the sampling method is haphazard.

[@ireneahadja4071]

Please how do you get the sample calculator

[@efiwecpa]

The sample calculator is provided as a software at audit firms. For those that don't have acces to the sample calculator, they have to calculate the sample size manually.

[@emmanueledmondfornah]

I really appreciate you How did you come about the 75% for the PM

[@efiwecpa]

The percentage for PM is a guideline and I think every audit firm has their own standard for setting the PM. I used 75% based on the guideline in the audit firm I work. In summary, the PM is a thing of professional judgement.

[@efiwecpa]

If there were significant or numerous misstatements accumulated in previous year audit, the auditor is likely to use a lower PM let's say 65%. However if there were very few misstatements identified in previous audit, the auditor may use a higher PM let's say 90%.

[@ymtan290]

how to determine the risk factor?

[@efiwecpa]

In audit firms, the risk factors are standardized meaning we don't have to calculate the risk factor. The risk factor will be automatically determined based on the degree of risk of material misstatement.

[@yel6209]

determination of risk can be quantitative or qualitative. quantitative can mean it is greater than our tolerable error meaning it may have a significant risk. qualitative may mean that the account has voluminous transaction, inherently risky, susceptible to thef

[@harshitbhateja7568]

I didn’t get how did we attain risk factor of 3 and my firm does not have any fixed risk factor. Kindly help with this I need to start my audit procedure. P.s. I just love your videos. Big fan ma’am.

[@harshitbhateja7568]

I didn’t get how did we attain risk factor of 3 and my firm does not have any fixed risk factor. Kindly help with this I need to start my audit procedure. P.s. I just love your videos. Big fan ma’am.

[@mounikagadde3395]

Can you please tell me how to test internal controls, collection of samples, documentation please help me out