[Anonymous]

I just can’t wrap my head around how sample size is determined. I have my exam in a couple of days. There is a chart in my review book, but I want to understand the concept behind it because I know if i try to memorize it I am going to forget on the exam. Can anyone please explain the concept?

It says the sample size will INCREASE if:

Tolerable rate decreases (inverse relationship)

Confidence Level (Reliabiity) increases (direct relationship)

Deviation Rate increases (direct relationship)

Population Size increases (direct relationship)

Allowance (Precision) (More Accruate) decreases (inverse relationship)

Thanks!!

[msmeyer]

Since nobody has replied, here are some thoughts on what you wrote:

It says the sample size will INCREASE if:

Tolerable rate decreases (inverse relationship) – the tolerable rate is how much you “tolerate”…if you think if it as pain, the less pain you can tolerate, the more medicine you have to take.

Confidence Level (Reliabiity) increases (direct relationship) – if you are relying on something, you want to make sure it's right. To make sure it is as accurate as possible (because you are relying on it more), you take a bigger sample size.

Deviation Rate increases (direct relationship) – I'm thinking this is “expected deviation rate”–the more an auditor expects to have a deviation, the bigger the sample.

Population Size increases (direct relationship) – population size shouldn't affect sample size too much because remember that as long as you take the sample randomly (each item has an equal opportunity of being selected), you should have an appropriate sample. I thought I remembered reading somewhere that the population size shouldn't really affect the sample size but I just saw otherwise in a Wiley book. Interesting…

Allowance (Precision) (More Accruate) decreases (inverse relationship) – again, if you want to be more precise you try to get closer to the target so your “target” area gets bigger (for example if you are shooting from 100 feet away there are more chances of shooting off the target and the target area is really smaller than if you are 10 feet away)…not sure I made sense there.

Make sure you are also looking at risk of assessing control risk to high/low, etc.

BEC - 86
FAR - 76
AUD - 73, 86
REG - 61, 73, 82

DONE!!

CPA, CIA, CRMA

[Anonymous]

Thanks!!

[Author]

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