Evaluating errors in a classical variables sample

After you have performed your audit procedures on a set of sampled data you can use Analytics to:

• project the sample audit value to the entire account
• project any misstatements you found to the entire account
• calculate upper and lower limits on estimated total audit value, and estimated total misstatement amount

Even if you found no errors, you still use the evaluation feature to calculate the basic allowance for sampling risk. In this situation, you must use the mean-per-unit estimation type.

Follow the correct process for classical variables sampling

Evaluating errors is the final stage in the classical variables sampling process. You must have performed the previous stages before you can evaluate errors.

For more information, see:

• Preparing a classical variables sample
• Performing classical variables sampling

Which estimation type should I use?

The CVS Evaluate stage gives you the option of four different estimation types (evaluation methods):

• Mean-per-unit
• Difference
• Ratio separate
• Ratio combined

The estimation type that you should use depends on the nature of the data: the sample book values, the sample audit values, and the relation between them.

Guidelines

The guidelines below help you select an estimation type.

Import the updated sample table

Import the updated sample table to Analytics from Excel, or from whatever external application you used to add audit values.

The table must contain:

• a book value field the original recorded book values that existed when you drew the sample
• an audit value field the audited values, updated where necessary based on the results of your analysis

For more information, see Import Microsoft Excel data.

Evaluate the results of the sample analysis

1. Open the updated sample table that you just imported.
2. Select Sampling > Classical Variables Sampling (CVS) > Evaluate.

   Note

   The menu option is disabled if a table is not open.

   The CVS Evaluate dialog box opens. If you are using the output results of the CVS Prepare and the CVS Sample stages as input for the evaluation stage, most of the fields are prefilled with the required values.

   If a number of the prefilled values are missing, you can:

   • rerun the CVSSAMPLE command from the log to regenerate the values
   • use the CVSEVALUATE command generated during the CVS Sample stage, if you saved it

     Note

     If you use the saved CVSEVALUATE command, you need to update the name of the audit value field, and possibly the evaluation type.

     For more information, see CVSEVALUATE command.

3. On the Main tab, select one of the following options from the Estimation Type drop-down list:
   • MPU
   • Difference
   • Ratio Separate
   • Ratio Combined
   • All

   Note

   The options are explained in detail above.

4. If you are not using prefilled values, or you want to adjust one or more values, enter or update the required values:
   • Confidence Level (%)
   • Number of Expected Errors
   • Book Value
   • Audit Value
   • Precision Limits
   • Top certainty stratum cutoff (Cutoff, Count, Value)
   • Bottom certainty stratum cutoff (Cutoff, Count, Value)
   • Strata Boundaries
   • Population (Count, Value)

   Note

   The input values are explained in detail below.

   Caution

   Normally you should not change any of the prefilled values. Changing prefilled values can negate the statistical validity of the evaluation process.

5. On the Output tab:
   1. In the To panel, select one of the following:
      • Screen displays the results in the Analytics display area

        Tip

        You can click any linked result value in the display area to drill down to the associated record or records in the source table.

      • File saves or appends the results to a text file

        The file is saved outside Analytics.

   2. If you selected File as the output type, do one of the following:
      • Enter a file name in the Name text box.
      • Click Name and enter the file name, or select an existing file in the Save or Save File As dialog box to overwrite or append to the file.

        If Analytics prefills a file name, you can accept the prefilled name, or change it.

        You can also specify an absolute or relative file path, or navigate to a different folder, to save or append the file in a location other than the project location. For example: C:\Results\Output.txt or Results\Output.txt.

      Note

      ASCII Text File or Unicode Text file (depending on which edition of Analytics you are using) is the only option for File Type.

6. Click OK.

   The CVS Evaluate output results are displayed, or saved to a file.

   Note

   The output results are explained in detail below.

   For additional information about interpreting output results, see Judging whether the invoice records as a whole are fairly stated.

CVS Evaluate dialog box inputs and results

The tables below provide detailed information about the input values in the CVS Evaluate dialog box, and the output results.

Main tab – input values

Input values – CVS Evaluate dialog box	Description
Estimation Type	The estimation type (evaluation method) to use.
Confidence Level (%)	Your desired confidence level that the resulting sample is representative of the entire population. For example, entering 95 means that you want to be confident that 95% of the time the sample will in fact be representative. Confidence is the complement of “sampling risk”. A 95% confidence level is the same as a 5% sampling risk.
Number of Expected Errors	The minimum number of errors you expected in the sample. This value is not used in the CVS Evaluate calculation. Instead, it is used to trigger a notification if the actual number of errors you found in the sample is less than the Number of Expected Errors. If actual errors are fewer than Number of Expected Errors, the only evaluation method available is mean-per-unit.
Book Value	The numeric field in the sample table containing the recorded book values.
Audit Value	The numeric field in the sample table containing the audit values.
Precision Limits	The type of precision limit to use. For more information, see Preparing a classical variables sample.
Top certainty stratum cutoff (Cutoff, Count, Value)	The top certainty stratum cutoff value that was used in the CVS process, the number of records in the top certainty stratum, and their total value.
Bottom certainty stratum cutoff (Cutoff, Count, Value)	The bottom certainty stratum cutoff value that was used in the CVS process, the number of records in the bottom certainty stratum, and their total value.
Strata Boundaries	The boundary values that were used for stratifying the data set.
Population (Count, Value)	The number of records in each source table stratum, and the total value for each stratum.

Output results

Output results – CVS Evaluate	Description
Evaluation Method	The estimation type you selected.
Confidence Level	The confidence level that you specified as an input.
Point Estimate	A statistical projection of the most likely audited value of the entire data set in the source table. The Point Estimate is the midpoint of an estimated range.
Precision	A statistical projection of the amount by which the Point Estimate could vary. The Point Estimate plus or minus the Precision forms the upper and lower limits of the range.
Estimated Total Audited Value	A visual presentation of the Estimated Total Audited Value range. How the range works The Population Book Value of the source table is within the range: The account is very likely to be fairly stated. The Population Book Value of the source table is outside either the upper limit or the lower limit of the range: The account could be materially misstated.
Estimated Total Error	A visual presentation of the Estimated Total Error range. How the Error range is calculated The Point Estimate of total error is Estimated Total Audited Value minus Population Book Value. The Point Estimate plus or minus the Precision forms the upper and lower limits of the range. A negative error amount indicates overstatement error, and a positive error amount indicates understatement error. How the range works The Estimated Total Error range is within the range of zero (0) plus or minus the Monetary Precision you specified during the CVS Prepare stage: The account is very likely to be fairly stated. Either limit of the Estimated Total Error range is outside either limit of the Monetary Precision range: The account could be materially misstated.