Glossary

• A
• C
• D
• E
• G
• H
• M
• N
• O
• P
• R
• S
• V

A

Administrative data

Data sets collected by government institutions or agencies for public administration purposes

Attribute sampling

The selection of sampling units on the basis of a characteristic that can be determined by a binary choice, such as yes/no, error/no error, or on time/late. Attribute sampling is used to assess the proportion of a specified attribute in a sample and to extrapolate this proportion to the entire population being sampled.

Audit observation

The outcome of an objective evaluation of audit evidence against specific audit criteria.

Audit recommendation

A measurable statement for corrective action made by the auditors and addressed to the audited organization(s). Recommendations must address the causes of deficiencies identified in audit reports.

C

Census

A complete enumeration (100%) of a population. (Also known as a certainty sample.)

Confidence interval

The range of values in which we can be reasonably confident that the true population value resides, given the result from a sample. (Also known as the margin of error.)

Confidence level

The certainty with which the estimate value obtained from a sample lies within the confidence interval for that sample.

Controls

The policies and procedures designed, put in place, and operated within an organization to mitigate the risks that threaten the achievement of the organization’s objectives.

D

Deviation

A departure from an expected value or standard.

E

Expected error rate

The estimate of the true rate of occurrence of the event (error) in the population being tested.

G

Generalizable sampling

The application of auditing procedures to a generalizable group of less than 100% of the items within a population of audit relevance such that all sampling units have a chance of selection in order to give the auditor a reasonable basis on which to draw conclusions about the entire population. (Also known as probabilistic sampling, statistical sampling, or representative sampling.)

H

Heterogeneity

The level of differentiation among sampling units within a population.

Homogeneity

The level of uniformity among sampling units within a population.

M

Materiality

The magnitude of an omission or misstatement of accounting information that may change or influence the economic decisions of users of financial statements. In performance audits, the equivalent concept is “importance” or “relevance” in order to include quantitative dimensions beyond strict monetary value as well as qualitative considerations.

Mean

The sum of all the values in a set of observations (either a census or sample) divided by the number of observations, indicating the typical value for a set of observations. (Also known as average.)

Median

A value separating the higher half from the lower half of a data sample, population, or probability distribution.

N

Non-generalizable sampling

A form of sampling in which auditors rely on their own judgment when choosing units of a population for examination. (Also known as judgmental sampling, non-probabilistic sampling, or purposeful sampling.)

O

Observed error rate

Actual value of the rate of occurrence of an event (error) in the population being tested.

P

Performance audit

An independent, objective, and reliable examination of whether government programs, activities, or organizations are performing according to the principles of economy, efficiency, and effectiveness.

Population

The total number of items from which a sample is drawn.

Precision

The accuracy of a sample estimate compared with the actual value of the population.

Purposeful sampling

A form of non-generalizable sampling based on the introduction of an explicit bias in the sample’s selection, with the specific intent of isolating and selecting information-rich cases that will be particularly useful to gain insight and understanding of the topic.

R

Random sample

A sample in which every item in the population has an equal chance of being selected.

Random seed

A random seed is a number (or vector) used to initialize a pseudorandom number generator, i.e., an algorithm for generating a sequence of numbers whose properties approximate the properties of sequences of random numbers.

Risk

An event or action that may adversely affect an organization’s ability to achieve its objectives. Assessing risk involves considering the probability (or likelihood) of the event occurring and the potential impact of that event.

S

Sample

A selection of items from a population.

Sample size

The number of items selected in a population.

Sampling frame

A list of the items or people forming a population from which a sample is taken.

Sampling unit

What is being sampled (files, transactions, projects, individuals, regions, etc.). Each unit is regarded as individual and indivisible when the selection is made.

Skewness

Distortion or asymmetry in a symmetrical bell curve, or normal distribution, in a set of data. If the curve is shifted to the left or to the right, it is said to be skewed. Skewness can be quantified as a representation of the extent to which a given distribution varies from a normal distribution.

Strata

Two or more mutually exclusive subgroups of a population defined in such a way that each sampling unit can belong to only one subgroup or stratum.

Stratification

The process of segregating a population into homogenous subpopulations explicitly defined so that each sampling unit can belong to only one subpopulation.

Substantive test

A procedure performed to provide audit evidence as to the completeness, accuracy, and validity of information in the accounting records and financial statements, or for compliance with standards and tests of non-automated controls.

V

Variable sampling

A form of sampling in which the selected sampling items are measured or evaluated in terms of a continuous variable of interest (such as dollars, distance, or time). Variable sampling is used to estimate the value of the variable within the whole population.

Variance

A measure of the degree of dispersion among a set of continuous data. The square root of variance is called the standard deviation.

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