MUS provides a conclusion in terms of monetary value i.e. “Based on the sample results, the amount of misstatement in the account balance would not exceed $X (tolerable misstatement). It is used in auditing for “substantive tests” of account balances (e.g. accounts receivable, investments, inventory) to determine if the financial statements are fairly stated. Show The development of MUS was pioneered in the early 1960’s by Kenneth W. Stringer of Haskins & Sells with Frederick F. Stephan (Professor of Statistics) Princeton University. Determine MUS sample sizeThe sample size can be determined by using MUS sample size tables (e.g. AICPA tables) or statistical audit software. The inputs required are:
Example:
 If statistical audit software is used (e.g. AuditSampler), the confidence factor for the MUS sample size calculation would be computed numerically based on the Poisson Distribution. Select Sample ItemsSamples are selected from the population based on a sampling interval which is obtained by dividing the population value with the sample size. The samples are selected by cumulatively adding the sampling interval to pick every nth dollar unit in the population after an initial random start. The random start would be a value between $1 and the sampling interval.
For example, if the population value is $94,613,131 and the required sample size is 51, the sampling interval would be $1,855,159 (i.e. 94,613,131/51). Each amount in the population is added to a “cumulative total”. The amount which causes the cumulative total to equal or exceed the random start ($668,048) is selected as the first sample. The remaining samples are selected from subsequent amounts which cause the cumulative total to equal or exceed each increment of the sampling interval (i.e. $2,523,207; $4,378,366; $6,233,525 etc).
Evaluate Sample ResultsSample results are evaluated by comparing the Upper Misstatement Bound (UMB) and Lower Misstatement Bound (LMB) to the tolerable misstatement (TM). The upper and lower misstatement bounds equals the upper error limit for overstatements and understatements¹.
In the evaluation above three (3) overstatements were detected in the sample, LMB = $1,863,878 and UMB = $3,473,238. As the upper misstatement bound exceeds the tolerable misstatement by $473,238 (i.e. 3,473,238 – 3,000,000), there is risk that the account balance is materially misstated (overstated). In evaluating the sample results, the preliminary assessment of risks may need to be revised upward if misstatements are detected. The auditor may need to increase the sample size and re-evaluate the results. Our sites
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When should monetary unit sampling be used?Monetary unit sampling is appropriate for use with substantive or misstatement testing. By biasing larger amounts, monetary unit sampling provides a high level of assurance that all significant amounts in a population are subject to testing.
Why will an auditor use Mus?MUS advantages include the following: It is easier to apply than classical variables sampling. There is no need to consider the characteristics of the population when determining sample sizes, such as the standard deviation of dollar amounts within the population.
How is the sampling unit defined when monetary unit sampling is used for statistical sampling?The sampling unit for nonstatistical audit sampling in tests of details of balances is almost always the item making up the account balance. Monetary unit sampling (MUS) is a statistical technique in which the sampling unit is the individual dollars that make up an account balance.
Why is it difficult to determine the appropriate sample size for mus?Why is it difficult to determine the appropriate sample size for MUS? How should the auditor determine the proper sample size? The difficulty in determining sample size lies in estimating the amount of misstatements that may be found in the sample.
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