Controlling audit risk / BEBR No. 549

Includes bibliographical references (p. 23)."The objective of this paper is to illustrate how an auditor may use statistical sampling to help control the audit risk. The focus is on planning a significant area of audit interest such as the revenue cycle. Both statistical substantive tests of details and any required statistical tests of compliance may be designed so that the risk of failing to discover a material monetary error as well as the risk of overauditing may be limited to a tolerable level. In addition, by considering the extent of these tests at several levels of planned reliance on the system of internal accounting control, a least cost combination can be selected.