An empirical study of audit sampling problems
Tatum, Kay Ward
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Statement on Auditing Standards (SAS) No. 39 "Audit Sampling" was issued in June 1981. Several events associated with its issuance suggested that auditors possibly were experiencing various problems implementing its requirements. The specific objectives of this study were to: 1. Determine the major audit sampling problems in current audits based on frequency of occurrence 2. Determine if the frequency of audit sampling problems was related to a statistical versus a nonstatistical approach or a high versus low level of continuing professional education (CPE) 3. Determine if the frequency of audit sampling problems in current and past audits was different 4. Determine the nature and extent of audit sampling methods in current audits 5. Compare the frequency of audit sampling problems and methods in compliance and substantive tests 6. Determine the effect of the SAS No. 39 requirements on the audit process. There were 1,988 public accounting firms surveyed. This population was divided into four strata: largest firms, other large firms. Division firms, and other small firms. Data analysis included descriptive statistics and t-tests. Survey results relative to each objective were: 1. Eight (fourteen) considerations and procedures performed in compliance (substantive) tests were determined to be major problems. 2. Frequencies of problems were significantly greater for the largest firms using a nonstatistical approach and the other small firms providing a high level of CPE to their audit staffs. 3. Frequency of problems in current audits decreased significantly for the largest and other small firms. 4. Within a stratum the firms' approaches to testing were fairly consistent across various categories of compliance and substantive tests. The least amount of audit sampling was reported by the other large firms. The amount of statistical sampling was about the same for all strata. 5. The frequencies of audit sampling in compliance and substantive tests were not significantly different. The frequency of statistical methods was significantly greater in compliance than substantive tests. 6. The firms changed their audit processes to incorporate the SAS No. 39 requirements by modifying their audit sampling definitions and approaches, increasing audit sampling, and increasing audit sampling documentation.