Attribute Sampling Audit | CPA Exam

What is attribute sampling in auditing, and how do you determine sample size? This CPA Exam AUD lecture explains attribute sampling, the method auditors use to test internal controls and decide whether they can rely on those controls to reduce substantive testing. It covers key planning terms, evaluating results, and the factors that drive sample size. Ideal for CPA candidates studying audit sampling, and for accounting students learning how auditors test controls statistically. Try it free at farhatlectures.com — interactive exercises, lectures, simulations, cases, multiple choice, and AI tools for CPA, CMA, EA and students. Video Timeline & Key Concepts: 0:00 — Introduction 1:38 — Attribute sampling and its objective: estimating the population exception rate 6:03 — Tolerable exception rate (TER) 8:13 — Acceptable risk of overreliance (ARO) 10:51 — Estimated population exception rate (EPER) 12:35 — Sample exception rate: errors found in the sample 13:18 — Computed upper exception rate (CUER) and comparing it to TER 17:35 — Factors that affect the required sample size Frequently Asked Questions: What is attribute sampling used for? Attribute sampling is used to test the operating effectiveness of internal controls. It helps the auditor estimate the rate of deviations in a population and decide whether the control can be relied upon to reduce substantive testing. What is the tolerable exception rate (TER)? The tolerable exception rate is the maximum deviation rate the auditor is willing to accept while still concluding that a control is operating effectively. If actual deviations exceed the TER, the auditor generally cannot rely on the control. What is the computed upper exception rate (CUER)? The computed upper exception rate is the statistical upper limit of the population deviation rate based on the sample results. The auditor compares the CUER to the tolerable exception rate to decide whether the control is acceptable. What factors affect the required sample size? Lowering the tolerable exception rate increases the required sample size, and a higher estimated population exception rate also increases it. A higher acceptable risk of overreliance allows for a smaller sample size. When should an auditor skip sampling for a control? If the estimated population exception rate is higher than the tolerable exception rate, the auditor generally should not rely on that control. In that situation, testing it through sampling would not be an efficient use of audit effort. #CPAexam #CMAexam #enrolledagentexam #accountingcourses #collegecourses #courses #AUD #attributesampling #auditsampling #internalcontrols #ProfessorFarhat #accountingstudents