The MUSt Knows of MUS Sampling

Risk Advisory/Internal Audit

By Jamie Magerl

Sample selection during audit testing can be a challenge for any auditor. Auditors most often utilize a randomly selected sample to gain comfort over their population; however, in certain situations a MUS (monetary unit sampling) methodology may produce a sample that is a better representation of the population. Monetary unit sampling is a sampling methodology that uses an attributes sampling theory to conclude on a population in dollar amounts rather than rate of occurrence. The sample is selected based on each item having a chance of selection proportional to its size; therefore, stratification is unnecessary. For example, a one million dollar accounts receivable balance would be considered a population of one million dollar units rather than two hundred customer balances.

A MUS sample size can be determined in a number of ways, including MUS tables or computer programs. These sample sizes are typically selected based on predefined factors such as the tolerable rate and deviation rate. Once a sample size has been determined, a sampling interval can be calculated by dividing the population size by the sample size. The sampling interval is then applied to the population of dollar units. MUS could be useful when selecting a sample for accounts receivable or loans receivable confirmation, investment security pricing, inventory price testing, or fixed-asset additions. As with any sample, it is important to always use auditor judgment to analyze the testing results and to ensure that your sample represents your population.

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This advice is not intended or written to be used for, and it cannot be used for, the purpose of avoiding any federal tax penalties that may be imposed, or for promoting, marketing or recommending to another person, any tax-related matter.

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