Abstract
The paper focuses on the quality of audits in small and medium practices (SMPs) when these audits are performed according to the freely available guidelines published by various regulatory bodies. Audit sampling is highlighted as a key component of audit quality in several reports of regulatory bodies’ inspection findings. A sampling methodology frequently used by SMPs is monetary unit sampling (MUS) in combination with either MUS or ratio projection. The effectiveness of this approach is investigated in terms of four criteria defined in the paper. Simulation was used for this purpose. Different scenarios were obtained by varying sample size, number of tainted items in the population and the total error amount. An actual revenue database was used as a point of departure. The study shows that simply following the proposed sampling guideline, can easily lead to sub-optimal use of resources. A more considered approach may alleviate this problem.
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Acknowledgment
I would like to thank Prof. Sarel Steel for his support and guidance throughout the process of writing this manuscript.
Correction Statement
This article was originally published with errors, which have now been corrected in the online version. Please see Major Correction (10.1080/10291954.2021.1917190).