What are the disadvantages of pps sampling?

The shortcomings of pps sampling in auditing short answer questions include the following aspects:

(1) When using PPS sampling, it is generally assumed that the audit amount of the sampling unit should not be less than zero or greater than the book amount. If CPA expects to underestimate or verify that the amount is less than zero, it needs special consideration when designing PPS sampling method.

(2) If certified public accountants find underestimation in PPS samples, they need special consideration when evaluating the samples.

(3) The choice of zero balance or negative balance needs special consideration in the design. For example, if the accounts receivable are to be sampled, the CPA may need to separate the credit balance as a separate population. If it is very important to check items with zero balance, certified public accountants need to test them separately, because PPS sampling will not choose zero balance.

(4) When errors are found, if the risk level is certain, PPS sampling may overestimate the impact of sampling risk when evaluating samples, which may lead to the possibility that certified public accountants may reject an acceptable overall book amount.

(5) In PPS sampling, CPAs usually need to accumulate the total amount one by one. However, if the relevant accounting data are stored in electronic form, it will not increase many additional audit costs.

(6) When the overall misstatement amount is expected to increase, the sample size required for PPS sampling will also increase. In these cases, the sample size of PPS sampling may be larger than that of traditional variable sampling.

Extended data:

The advantages of PPS sampling include the following aspects:

(1)PPS sampling is generally easier to use than traditional variable sampling. Because PPS sampling is the basis, certified public accountants can easily calculate the sample size and evaluate the sample results manually or by using the scale. The selection of samples can be done with the help of computer programs or calculators.

(2) The sample size of PPS sampling does not need to consider the expected variability of the audited amount. The sample size of traditional variable sampling is calculated according to the characteristic variability or standard deviation of the overall project. When PPS sampling determines the required sample size, it is not necessary to directly consider the standard deviation of the amount of money.

(3) The probability that an item is selected in the 3)PPS sampling is directly proportional to its monetary amount, so the generated sample is automatically stratified. If traditional variable sampling is used, certified public accountants usually need to stratify the population to reduce the sample size.

(4) In PPS sampling, if the project amount exceeds the sampling interval, the PPS system will automatically identify all single major projects through sampling.

(5) If certified public accountants are not expected to misstate, the sample size of PPS sampling is usually smaller than the traditional variable sampling method.

(6)PPS samples are easier to design, and samples can be selected before obtaining a complete population.

PPS sampling takes the monetary unit as the sampling unit, but the certified public accountant does not audit the specific monetary unit, but must determine the physical unit (that is, the logical unit) for audit testing.

As shown in table 12- 14, certified public accountants should randomly select samples from the total items between L ~ L ~ 7376 (specific amount). However, in order to carry out the audit procedure. Certified public accountants must find out the whole project between L and l~l2 (logical unit). If the random number chosen by CPA is 30 14, then the logical unit associated with this number is 6.

References:

Baidu Encyclopedia-Probability proportional scale sampling