Presenting Beta Risk to Students.

ABSTRACT: Oftentimes statistical sampling techniques are confusing to students. Contributing to this confusion are different approaches taken for the same technique without any reconciliation of the approaches. Two seemingly different approaches taken to include β risk in the determination of sample sizes for variables sampling plans have been proposed in the accounting literature and in auditing texts. The purpose of this article is to prove mathematically the equivalency of these two approaches for controlling β risk and to provide a derivation of the sample size formula using auditing terminology. The article concludes with a case suitable for classroom presentation. Such a demonstration will aid accounting and auditing instructors in presenting a topic that is often confusing to students as well as promote increased understanding of β risk and its control.