IND 205 Audit Populations & Samples TLO #10: Given the requirement to audit a Contractors Property Management System, determine how to define a population,

IND 205Audit Populations & Samples

TLO #10: Given the requirement to audit a Contractor’s Property Management System, determine how to define a population, determine the appropriate sample size, and select a sample for a selected outcome/process.


ELOs:1. Define population.2. Define sample.3. Define sample item.4. Define sample item element.5. Describe the various types of sampling methods (statistical, judgment, purposeful). Include the advantages and disadvantages to each one.


ELOs:6. Determine the method used to select a statistical sample from a population.7. Describe how populations may be defined for each process/process.8. Describe a method used to select a sample from a population for Plant Clearance sampling.9. Compare the sampling methods used for Plant Clearance and Property Management.


• Population:• An aggregation of documents or records, or even physical assets, or

possibly even actions selected for review due to their “common characteristics.” The term “population” is also known as a “lot.” Selecting the correct population is a very important part of the audit because the items select must have common characteristics in order for the results to be valid.

Examples of

POPULATIONS


Sample:A number of items such as documents, records, articles, or actions selected from a population/lot for a review in order to draw inferences regarding and generalizable to the status of the population. This is one of the more critical aspects of performing the audit because an inappropriate sample can lead to “audit bias” resulting in the findings being ruled invalid.

Sample Item:A single document record, article, asset or even an action from the sample.


Confidence Level:The confidence level or reliability is the probability that a sample will accurately represent the population from which it was selected. For example, a sample with a 95% confidence level would be said to accurately reflect the population 95% of the time. That is, if 100 samples were selected from the population, 95 of those samples would accurately reflect the population. (Flesher 1996).Another way of looking at it would be how many times out of 100 shots would an archer or shooter hit the bulls eye (95 times out of 100)?


Segment:A subdivision of a Process. Since not all property and not all processes surrounding that property are the same, Process Segments were established to assist in the proper framing of a population under a process. These Process segments assist the Property Administrator in selecting the proper population for sampling driven by their “common characteristics.”

FAR 52.245-1(f)(viii) Utilizing Government property. (A) The Contractor shall utilize, consume, move, and store Government Property only as authorized under this contract. The Contractor shall promptly disclose and report Government property in its possession that is excess to contract performance.


Define Population and Sampling UnitBased upon:

-Process or Outcome: (see FAR 52.245-1(f) for Outcomes that are required in the Contractor’s Property Management System)

- Process Segment (see previous slide)-Criteria: Criteria/Criterion-Is an evaluative item of a PMS Process or Process

segment subject to audit and analysis by the appropriate method. Specifically, criteria are the questions that are posed of the Contractor’s PMS (discussed in TLO #11).

Homogeneity: items in the population have common characteristicsTimeframe (ex. 1 yNOTE: Population Selection is extremely important!Define Population and Sampling Unit


Specify the Acceptance and Rejection RatesThe Department of Defense allows the use of variable confidence levels depending upon a “risk” that is considered to be acceptable.- Typical Confidence Levels are: 90%, 95%, 97%, or 100% (see previous slide describing confidence level)- Accept-Reject Rates for 1 item to 100,000+ (these are provide in statistical sampling tables according to the confidence level)- The Double Sampling Plan allows a “second chance” to accept. If the sample selected is within the acceptable compliance range then there is no need to select a second sample. But when it is not then a second sample (and more work) is required.


Determine the Sample Size for the desired Confidence LevelSample Size depends upon the lot size as and the Confidence Level!!

This is for a 90% Confidence Level

1-18 Select All19-50 Select 1851-90 Select 2191-150 Select 25151-400 Select 32401-10,000 Select 34


Select the Sample Randomly•Valid Statistical Procedures require Random Sampling•Random Sampling protects against bias•Random selection of the sample allows the results to be generalized to the population


Select the Sample Randomly (continued)Random numbers may be selected by using:• Random Number Table• Computer generated random numbers• Random numbers are available on the internet

– RANDOMIZER.ORG


Perform the Audit Procedure•Use:

-Populations-Samples Selected-Criteria

•Work Papers•Audit Evidence (Records)

Documents

IND 205 Audit Populations & Samples TLO #10: Given the requirement to audit a Contractors Property Management System, determine how to define a population,