Definition
Items are picked by systematic selection across the cumulative dollar total, using a sampling interval, often tolerable misstatement divided by a confidence factor. An item larger than the interval is selected automatically. Results are evaluated in dollars, giving a projected misstatement and an upper limit on misstatement at the chosen confidence level.
Why it matters in an audit or review
MUS suits populations where overstatement is the main concern and few errors are expected, such as receivables, inventory and fixed assets. It builds stratification into the selection, since larger balances are tested more heavily. Its weaknesses are understatements, zero or negative balances, which have no chance of selection, and populations with many expected errors.
Example
A $4 million receivables population, tolerable misstatement of $120,000 and a 95 percent confidence factor of 3.0 with no expected errors (illustrative). The interval is $120,000 divided by 3.0, or $40,000, giving about 100 items. A customer balance of $65,000 exceeds the interval and is tested for certain. A single $1,200 overstatement in a $6,000 item is 20 percent tainted, so it projects to $8,000.
Common mistakes
- Excluding credit balances instead of testing them separately.
- Applying the interval to a population list that is not reconciled to the general ledger.
FAQ
Is MUS the same as probability proportional to size sampling?
Yes. The terms are used interchangeably.
Sources
- AICPA, AU-C Section 530, Audit Sampling
- AICPA, Audit Guide, Audit Sampling (monetary unit sampling and tainting)
Definitions paraphrase AICPA and FASB guidance; read the standard itself before relying on a requirement. Example figures are illustrative. This page is guidance, not professional advice. Report an error