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Combined monetary unit sampling from several independent populations: Sample size planning and sample evaluation with the moment method

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  • RICHARD A. GRIMLUND

Abstract

. Although auditors often determine an upper bound on the amount of error in individual accounts, their primary concern is with the overall amount of error over several accounts. This paper presents a combined bound procedure for determining such an overall upper bound when using the moment method of monetary unit sampling (MUS). A procedure is also presented for determining optimal sample sizes over several independent accounts. The new combined bound procedure provides the moment method of MUS with the same type of flexibility that is currently available for the Stringer method of MUS. In addition, the new sample size planning procedure provides the combined moment bound with added flexibility and options that are not available when using a combined Stringer bound approach. The effectiveness and efficiency of both procedures has been investigated using 4324 separate simulation studies. The results indicate that the combined upper confidence bounds of the moment method are significantly smaller than those provided by the most attractive Stringer†based combined bound method. Further, the sample size planning procedure can be an effective audit tool. Résumé. Bien que les vérificateurs fixent souvent la limite supérieure du taux d'erreur acceptable pour des comptes particuliers, leur préoccupation première touche le taux global d'erreur pour un ensemble de comptes. L'auteur propose un procédé permettant d'établir une limite combinée visant la détermination de cette forme de limite supérieure globale grâce à l'utilisation de la méthode des moments appliquée à l'échantillonnage en unités monétaires. Il propose également un procédé visant la détermination d'échantillons de taille optimale pour un ensemble de comptes indépendants. Le nouveau procédé de limite combinée fait appel à la méthode des moments d'échantillonnage en unités monétaires avec le même type de souplesse que l'on peut actuellement obtenir en utili sant la méthode de Stringer. De plus, le nouveau procédé de planification de la taille de l'échantillon livre une limite combinée résultant de l'application de la méthode des moments en même temps qu'il offre une souplesse plus grande et des possibilités que n'offre pas la méthode de Stringer. L'efficacité et l'efficience des deux procédés sont analysées à l'aide de 4324 études de simulation distinctes. Les résultats indiquent que les limites de confiance supérieures combinées obtenues par la méthode des moments sont beaucoup plus faibles que celles que l'on obtient par l'application de la méthode de la limite combinée, plus attrayante, basée sur la méthode de Stringer. De plus, le procédé de planification de la taille de l'échantillon peut être un instrument de vérification efficace.

Suggested Citation

  • Richard A. Grimlund, 1990. "Combined monetary unit sampling from several independent populations: Sample size planning and sample evaluation with the moment method," Contemporary Accounting Research, John Wiley & Sons, vol. 6(2), pages 446-484, March.
    • Handle: RePEc:wly:coacre:v:6:y:1990:i:2:p:446-484
    DOI: 10.1111/j.1911-3846.1990.tb00769.x
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    1. C. S. Davis & M. A. Stephens, 1983. "Approximate Percentage Points Using Pearson Curves," Journal of the Royal Statistical Society Series C, Royal Statistical Society, vol. 32(3), pages 322-327, November.
    2. Godfrey, J & Neter, J, 1984. "Bayesian Bounds For Monetary Unit Sampling In Accounting And Auditing," Journal of Accounting Research, Wiley Blackwell, vol. 22(2), pages 497-525.
    3. Menzefricke, U & Smieliauskas, W, 1984. "A Simulation Study Of The Performance Of Parametric Dollar Unit Sampling Statistical Procedures," Journal of Accounting Research, Wiley Blackwell, vol. 22(2), pages 588-604.
    4. Loebbecke, Jk & Neter, J, 1975. "Considerations In Choosing Statistical Sampling Procedures In Auditing," Journal of Accounting Research, Wiley Blackwell, vol. 13, pages 38-52.
    5. Jane Ham & Donna Losell & Wally Smieliauskas, 1987. "Some empirical evidence on the stability of accounting error characteristics over time," Contemporary Accounting Research, John Wiley & Sons, vol. 4(1), pages 210-226, September.
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    1. Lakis Vaclovas & Masiulevičius Audrius, 2017. "Limitations and Application Possibilities of the Monetory Unit Audit Sampling Method: Theoretical Aspect," Ekonomika (Economics), Sciendo, vol. 96(1), pages 131-144, January.

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