All 18 Audit Sampling questions
More in Audit Sampling
What are the risks of over-reliance and under-reliance (for tests of controls)? What factors affect sample size? What is tolerable misstatement and tolerable rate of deviation? What is stratification and why is it used? When is 100% testing or specific-item selection used instead of sampling? How does reliance on internal controls affect substantive sample sizes? What is monetary unit sampling (MUS) and when is it used? How do you project (extrapolate) misstatements from a sample? What do you do when a sample reveals a misstatement or deviation? What is attribute sampling versus variables sampling?
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Auditing & Assurance › Audit Sampling

How do you evaluate the results of a control test sample?

Intermediate

Answer

Count the deviations (control failures) in the sample, compute the sample deviation rate, and for statistical sampling determine the upper deviation rate (adding an allowance for sampling risk). If the upper deviation rate is at or below the tolerable rate, the auditor may rely on the control; if it exceeds, control risk is higher and substantive procedures increase.
Sample 60, deviations 2 -> 3.3% sample rate;
if upper deviation rate <= tolerable rate -> rely on control.
Real-world example Finding 2 exceptions in 60 items, the auditor computes the upper deviation rate and decides whether reliance is still justified.

Common follow-ups: What is the upper deviation rate? | What if deviations exceed tolerable?

Internal Controls Evaluation Audit Risk & Materiality Audit Sampling
All 18 Audit Sampling questions