Sampling Practices of Auditors in Public Accounting, Industry, and Government (Retracted)

Abstract

Although audit sampling is a common procedure, relatively little is known about the sampling practices of auditors in public accounting, industry, and government. This study surveyed practicing auditors to determine how they: (1) planned sample sizes, (2) selected sample items, and (3) evaluated sample outcomes. Respondents also provided data on the training received, debiasing techniques employed when using nonstatistical (judgmental) methods, and literature sources relied on to provide guidance regarding sampling matters. Respondents in all areas of practice reported that a majority of audit sampling applications rely on nonstatistical methods for sample planning, selection, and evaluation. Despite the heavy reliance on nonstatistical methods, less than 10 percent of respondents reported receiving training in debiasing techniques, and no respondents reported using these techniques. Among statistical methods dollar-unit sampling is the most frequently employed technique. All respondents reported reliance on employer guidelines, and most reported reliance on sampling standards promulgated by the American Institute of Certified Public Accountants.

Accountants' Usage of Causal Business Models in the Presence of Benchmark Data: A Note*

“…This is consistent with case study evidence of managers' use of subjective judgements to identify and verify relationships between performance measures and managerial bonus computations (Ittner, Larcker, and Meyer 2003;Banker et al 2000;Kaplan and Norton 1996). Finally, Hall, Hunton, and Pierce (2002) find that only 15 percent of the auditors in their sample (from public accounting, industry, and government) rely on formal statistical methods. Indeed, the study finds that a majority of audit-sampling applications rely on nonstatistical methods for sample planning, selection, and evaluation.…”

An audit evidence planning model for the public sector

“…To this end, Eilifsen et al (2010) recommend a percentage interval of 90% -95% for a high level of assurance, 80% -85% for a moderate level of assurance and 70% -75% for a low level of assurance, while the audit sampling guide issued by the AICPA (2008) recommends 95% for a high level of assurance, 86% for a moderate level of assurance and 63% for a low level of assurance. Although the audit sampling guide issued by the AICPA is not authoritative under the ISAs issued by the IAASB, it is well accepted in practice (Hall, Hunton & Pierce 2002;Hoogduin, Hall & Tsay 2010). However, while the AICPA guidance does not assign descriptors to the risks and levels of assurance, when applying the AICPA guidelines, the IEPM assumes three distinct risk levels that imply three corresponding levels of assurance.…”

Sampling Practices of Internal Auditors at Corporations on the Standard & Poor's Toronto Stock Exchange Composite Index*

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The purpose of this study is to find out how often statistical and nonstatistical audit sampling practices are used by internal auditors in companies listed on the Standard and Poor's (S&P) Toronto Stock Exchange (TSX) Composite Index and how such practices are related to the training and background of the respondents. We adapted the questionnaire used by Hall, Hunton, and Pierce (2002) in their survey of U.S. auditors in public accounting, industry, and government.Although 20 percent of companies responding do not have an internal audit department, the other 80 percent use statistical methods to plan sample sizes 15 percent (± 5 percent) of the time, random sample selection methods 23 percent (± 5 percent) of the time, but statistical evaluation methods only 10% (± 4%) of the time. Despite the low percentage use, almost half of the respondents reported substantial training in statistical sampling and evaluation methods.

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“…The purpose of this study is to find out how often statistical versus nonstatistical methods are used in audit sampling by internal auditors in companies listed on the Standard & Poor's (S&P) Toronto Stock Exchange (TSX) Composite Index and how such practices are related to the training and background of internal auditors. We modified a questionnaire developed by Hall, Hunton, and Pierce (2002) in their U.S. survey of auditors in industry, public accounting, and government.…”

“…1 Previous studies were done more than 25 years ago and focused on whether auditors in public accounting used statistical methods in audit sampling (Anderson and Teitlebaum, 1973;McRae, 1974; Canadian Institute of Chartered Accounts [CICA], 1980;Ross, Sundby, and Retts, 1981). In these studies, respondents were asked whether they used statistical sampling or nonstatistical sampling, but Hall et al (2002) focused on the frequency of their use of these techniques. Our study continues this approach and investigates the relative frequency of the use of statistical and nonstatistical methods for sample size planning, sample selection, and sample evaluation by internal auditors.…”