{"id":1161,"date":"2021-03-25T01:17:09","date_gmt":"2021-03-25T01:17:09","guid":{"rendered":"https:\/\/alminawi.com\/?p=516"},"modified":"2025-09-27T13:00:57","modified_gmt":"2025-09-27T13:00:57","slug":"audit-sampling-episode-12-ratio-estimation-for-classical-variable-sampling","status":"publish","type":"post","link":"https:\/\/e.americanpro.org\/?p=1161","title":{"rendered":"Audit Sampling: Episode 12, Ratio Estimation for Classical Variable Sampling"},"content":{"rendered":"<p data-start=\"82\" data-end=\"448\">Ratio estimation is a classical variable sampling technique used by auditors to project misstatements in an account balance by applying the ratio of audited value to book value from a sample to the entire population. This method is particularly effective when the relationship between the book and audited values is proportional and consistent across the population.<\/p>\n<p data-start=\"450\" data-end=\"799\">In ratio estimation, the auditor calculates the ratio of total audited value to total book value in the sample. This ratio is then multiplied by the total book value of the population to estimate its true (audited) value. The difference between the population&#8217;s book value and its projected audited value represents the estimated total misstatement.<\/p>\n<p data-start=\"801\" data-end=\"1052\"><strong data-start=\"801\" data-end=\"823\">Practical Example:<\/strong><br data-start=\"823\" data-end=\"826\" \/>An auditor reviews a sample of <strong data-start=\"857\" data-end=\"873\">500 accounts<\/strong> with a total <strong data-start=\"887\" data-end=\"913\">book value of $580,000<\/strong> and determines the <strong data-start=\"933\" data-end=\"962\">audited value is $600,000<\/strong>. The <strong data-start=\"968\" data-end=\"1009\">population consists of 6,200 accounts<\/strong> with a <strong data-start=\"1017\" data-end=\"1051\">total book value of $7,120,000<\/strong>.<\/p>\n<p data-start=\"801\" data-end=\"1052\"><img loading=\"lazy\" decoding=\"async\" class=\"alignnone wp-image-517\" src=\"https:\/\/americanpro.org\/wp-content\/uploads\/2025\/06\/ratio-300x73.png\" alt=\"\" width=\"493\" height=\"120\" \/><\/p>\n<p data-start=\"1303\" data-end=\"1576\" data-is-last-node=\"\" data-is-only-node=\"\">This projected <strong data-start=\"1318\" data-end=\"1348\">understatement of $244,440<\/strong> indicates the population may be undervalued, guiding the auditor toward further analysis or adjustments. Ratio estimation offers a straightforward, effective way to estimate population misstatements when proportionality exists.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Ratio estimation is a classical variable sampling technique used by auditors to project misstatements in an account balance by applying the ratio of audited value to book value from a sample to the entire population. This method is particularly effective when the relationship between the book and audited values is proportional and consistent across the [&hellip;]<\/p>\n","protected":false},"author":2,"featured_media":1024,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[17],"tags":[],"class_list":["post-1161","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-internal-audit"],"jetpack_sharing_enabled":true,"jetpack_featured_media_url":"https:\/\/e.americanpro.org\/wp-content\/uploads\/2021\/03\/16-e1750015995731.avif","_links":{"self":[{"href":"https:\/\/e.americanpro.org\/index.php?rest_route=\/wp\/v2\/posts\/1161","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/e.americanpro.org\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/e.americanpro.org\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/e.americanpro.org\/index.php?rest_route=\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/e.americanpro.org\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=1161"}],"version-history":[{"count":1,"href":"https:\/\/e.americanpro.org\/index.php?rest_route=\/wp\/v2\/posts\/1161\/revisions"}],"predecessor-version":[{"id":2141,"href":"https:\/\/e.americanpro.org\/index.php?rest_route=\/wp\/v2\/posts\/1161\/revisions\/2141"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/e.americanpro.org\/index.php?rest_route=\/wp\/v2\/media\/1024"}],"wp:attachment":[{"href":"https:\/\/e.americanpro.org\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=1161"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/e.americanpro.org\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=1161"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/e.americanpro.org\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=1161"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}