Can you define monetary unit sampling and explain its importance in auditing?

Monetary unit sampling is a method whereby the population is defined as the individual dollars (or other currency) making up the account balance. Arandom sample is drawn of these individual monetary units and the physical audit units containing them are identified and audited. The results of auditing the physical audit units are applied, pro rata, to the random monetary units, and a statistical conclusion about all population monetary units is derived. Monetary unit sampling is now the most commonly used method of statistical sampling for tests of details of balances. This is because it uses the simplicity of attributes sampling yet still provides a statistical result expressed in dollars.

It does this by using attribute tables to estimate the total proportion of population dollars misstated, based on the number of sample dollars misstated, and then modifies this amount by the amounts of misstatements found. This latter aspect gives monetary unit sampling its variables dimension, although normal distribution theory is not used; rather an arbitrary rule of thumb is applied to make the adjustment.