Monetary unit sampling tutorial

This tutorial introduces you to the end-to-end process of monetary unit sampling in Analytics.

Estimated time 20 minutes

Summary You will draw a sample of records from an invoices table, and identify misstatements in the sample. Based on the sample results, you will make a statistical estimate of the total amount of misstatement in the entire table.

You then use the statistical estimate to judge whether the invoice records as a whole are fairly stated.

Main tasks To perform monetary unit sampling correctly, you need to do four main tasks:

The tutorial leaves out optional aspects of monetary unit sampling, and focuses on a single path, so you can quickly get a basic understanding of how monetary unit sampling in Analytics works.

Monetary unit sampling scenario

1   Calculate a valid sample size

1. In ACL_Rockwood.acl, open the Invoices table, located in the Sales_and_collection folder.
2. Click the Invoice Amount header to select the column.
3. Select Analyze > Profile to calculate the absolute value of the Invoice Amount field. Pin the Profile tab with the results of the calculation.
4. Select Sampling > Record/Monetary Unit Sampling > Calculate Size.
5. Leave Monetary selected.
6. Specify the input values exactly as they appear in the screen below and click Calculate to calculate the sample size.

   After reviewing the results, you can click OK to finalize the sample size calculation, or you can experiment with specifying different values (see below).

   

What the input values mean

Confidence	You want a 95% degree of confidence that the sample you are going to draw is representative of the entire population. Put another way: if you drew the sample 100 times, it would be representative 95 times, and unrepresentative only 5 times.
Population	The absolute value of the Invoice Amount field in the Invoices table.
Materiality	The total amount of misstatement in the account must exceed $1,392,005.96 (3%) to be considered a material misstatement.
Expected Total Errors	You expect the total amount of misstatement in the account is $464,001.99 (1%).

What the results mean

Sample Size	You should contact 219 customers.
Interval	If you use one of the interval methods of sample selection, the records selected correspond to either: the monetary unit that occurs every 21,140,918 units the monetary unit that is randomly selected from each block of 21,140,918 units Note In Analytics, 1 monetary unit = 1 cent For a detailed explanation, see How monetary unit sampling selects records.
Maximum Tolerable Taintings (%)	Note The monetary unit sampling tutorial does not use this number, which provides an alternative method for evaluating misstatement. What the number means: As you confirm invoice amounts in the sample, if the sum of individual tainting percentages exceeds 219.48% you can consider the account to be materially misstated. In a misstated amount, tainting is the percentage of the book value that the misstatement represents. For a detailed explanation, see Maximum Tolerable Taintings (%).

2   Draw the sample of records

1. Return to the Invoices table.

   If the Invoice Amount column is still selected, click the top left corner of the table view to deselect it. (The blank area to the left of the first column header.)

2. Select Sampling > Record/Monetary Unit Sampling > Sample.
3. Leave MUS selected.
4. Specify the input values exactly as they appear in the screen below and click OK to draw the sample of records.

   Make sure the invoice_amount field is selected in the Sample On drop-down list.

   

What the input values mean

Sample On	The invoice_amount field contains the book values you are auditing.
Fixed Interval	You are using the fixed interval selection method for drawing the sample of records. With the fixed interval selection method, you specify the initial monetary unit that is selected, and all subsequent selections are a fixed interval or distance apart. For a detailed explanation, see Fixed interval selection method.
Interval	The interval between selected monetary units is $211,409.18, or 21,140,918 units.
Start	The initial monetary unit selected is $0.01, or unit 1.
To	The sample of records drawn from the Invoices table is output to a new table called Invoices_sample.

3   Perform your analysis on the sample

For the purposes of the tutorial, assume that you do the following:

1. Contact the customers that appear in the Invoices_sample table.
2. Confirm receivable amounts and record any misstatements.

4   Project the analysis results to the entire population

1. Select Sampling > Record/Monetary Unit Sampling > Evaluate.

   Note

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

2. Leave Monetary selected.
3. Specify the input values exactly as they appear in the screen below and click OK to project the results.

   Note

   Use a comma between Item amount and Error, but do not use commas in the amounts. Enter each amount and error on a separate line.

   

What the input values mean

Confidence	The same degree of confidence you specified when you calculated sample size.
Interval	The interval you used when you drew the sample.
Errors	When you confirmed receivable amounts, misstatements entered in the format: book amount,misstatement amount In this example: One invoiced customer had no record of the amount $6,002.16. Another invoiced customer had a hard copy invoice amount of 13,997.46, rather than 31,997.46, indicating a probable data entry error in the Invoices table.

What the projected results mean

Basic Precision	Basic allowance for sampling risk: $634,228.00. Analytics calculates a basic allowance for sampling risk because even if you found no misstatements in the sample, you cannot be sure that no misstatements exist in the account as a whole.
Most Likely Error	Total projected misstatement for the account: $330,336.28. A projection to the entire account of actual misstated amounts you found in the sample.
Upper error limit (Total)	The maximum amount of misstatement for the entire account, projected with a 95% degree of confidence: $1,188,531.07 Put another way: There is a 95% probability that the total amount of misstatement in the Invoices table does not exceed $1,188,531.07. Because $1,188,531.07 is less than the $1,392,005.96 you specified for Materiality when you calculated the sample size, you can conclude that the accounts receivable are not materially misstated. For a detailed explanation, see What the “Upper Error Limit” tells you.