Auditing sample methods

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Reference no: EM1351094

1) Why do auditors find it necessary to use sampling? What are the risks associated with sampling? How might these risks affect the audit conclusion?

2) What are some of the different types of sampling methods available to the auditor? How does the auditor decide which method to use? How might the different methods affect the audit?

3) Fraud is an intentional act that results in a material misstatement in financial statements that are the subject of an audit. Fraud is typically described as arising from two types of misstatements, fraudulent financial reporting and misappropriation of assets. Misstatements arising from fraudulent financial reporting are intentional misstatements or omissions of amounts or disclosures in financial statements designed to deceive financial statement users where the effect causes the financial statements not to be presented, in all material respects, in conformity with generally accepted accounting principles (GAAP). Misstatements arising from misappropriation of assets (sometimes referred to as theft or defalcation) involve the theft of an entity's assets where the effect of the theft causes the financial statements not to be presented, in all material respects, in conformity with GAAP. Misappropriation of assets can be accomplished in various ways, including embezzling receipts, stealing assets, or causing an entity to pay for goods or services that have not been received. Comments?

Reference no: EM1351094

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