Question

Describe the two methods suggested for projecting a nonstatistical sample result. how does an auditor determine which method should be used

Answer 1

The two methods suggested for projecting a non-statistical sample result is as follows;
One of the method is applying misstatement ratio to population and difference projection.
The second method is the difference projection when misstatements are relatively constant for all items regardless of dollar size.
An auditor determine which method should be used by knowing the misstatement ratio when dollar amount of misstatements relates to dollar amount tested.

Answer 2

Non-Statistical Sampling is the method of evaluation the competence of the evidence gathered from the auditor. Selected-sample size is referred to as non-statistical sampling. There are two acceptable methods used for projecting the amount of misstatements. They are ratio projection and difference projection.

Ratio projection is used in the non-statistical sampling and classical variable statistical sampling. It projects the misstatement amount by dividing the amount of misstatement and percentage of the dollars of the sample population.

Difference projection is defined as the average misstatements of each and every item in the sample to the overall population. This projection is executed when the misstatement is stable for the entire item, though its dollar size varies.

Results arrived from these two projections are identical, when the same proportion of items in the populations are incorporated in the sample. But, when different proportions are arrived at, then the choice between the two is based on the auditor’s judgment.