That's the Way the Cookie Crumbles: An Attribute Sampling Application

Abstract

There have been numerous calls to increase active student participation in the undergraduate accounting learning process to better enable graduates to use creative problem-solving skills. We have designed an active and instructor-based learning activity on the audit sampling process that allows variation in the level of professor-led versus student-led learning. In the activity, students are presented with a bakery that wants to provide its customers with independent verification that each of its chocolate chip cookies have at least seven chocolate chips. Students develop and implement an attribute sampling plan to test management's assertion. By planning, performing, and evaluating a sampling procedure, students learn how attribute sampling can be used in an attestation engagement, the steps in sampling, sampling terminology, and potential pitfalls in the use of sampling. Feedback from students consistently rated the activity to be worthwhile and effective.

Keywords:

• Active learning
• problem-based learning
• sampling

Acknowledgements

The authors would like to thank Chris Agoglia, Charlie Bame-Aldred, Kevin Brown, Josh Herbold, Jack Tate, and anonymous reviewers for all of their insightful comments and suggestions. The authors would also like to thank the numerous students who have endured earlier versions of this activity.

Notes

Two of the universities have a major in business with a ‘concentration’ in accounting; the course requirements for both of these institutions are similar to universities granting a separate major in accounting.

Junior and senior years are years three and four in college, respectively.

The case requires students to determine tolerable error rate (see ‘The Sampling Process,’ number 6). In the final attestation report, the 5% would be replaced with the tolerable error rate set by the class. Similarly, the starting and ending dates would be changed to reflect the agreed upon sample period.

Statements on Standards For Attestation Engagements No. 12, ‘Amendment to Statement on Standards for Attestation Engagements No. 10, Attestation Standards: Revision and Re-codification,’ (American Institute of Certified Public Accountants, 2002).

Instructors can also use a sugar cookie mix or refrigerator/ready-to-bake sugar cookie dough and add chocolate chips instead of making cookie dough from scratch.

We recognize that using eight chips to ensure there are at least seven chips in each cookie may not be economical and therefore not completely consistent with real-world procedures. However, adding the additional chip increases the instructor's confidence that there will be no actual errors in the population used for the class exercise. The instructor can also choose to reduce the number of chips in some cookies in order to ‘plant’ known errors in the population. However, we have found that students tend to identify ‘errors’ even when there are none. We find that ensuring the population meets the assertion provides a richer environment in which to discuss sampling issues and concerns.

A more abstract alternative would be to have the students determine whether there are at least seven white chocolate chips in a container (e.g. a jar or plastic bag) filled with various types of chips. The same could be done with M&Ms or jelly beans or buttons. Davis (1997) presents an active learning setting using jars of jelly beans to illustrate sampling theory.

See Appendix C for chart on the effects on sample size of changing parameters as well as a numerical example.

See Appendix C for chart on the effects on sample size of changing parameters as well as a numerical example.

See Appendix C for chart on the effects on sample size of changing parameters as well as a numerical example.

See Appendix C for chart on the effects on sample size of changing parameters as well as a numerical example.

As discussed in the next section, the two methods of statistical sampling, random and systematic, require the population being sampled be pre-numbered or able to be sequenced.