This chapter covers the fundamental principles of audit sampling, a key technique used by auditors to form conclusions about an entire population based on a subset of data. Audit sampling helps auditors efficiently gather evidence, especially when it is not practical or necessary to examine all rec...
LO 9-1 Distinguish between sampling and nonsampling risk
What is Audit Sampling?
● Selecting and evaluating some of the items from a population
to be representative of some characteristic of the population
● Appling a procedure to less than 100% of a population to estim
population
○ Either an attribute of the population (qualitative)
○ Or the quantitative balance of the population
● A key piece of making this work?
○ We have to be able to expect the sample to be represe
○ All samples should be selected in a way that they can b
valid inferences about the population.
Risk
Sampling Risk
● Risk that the auditors’ conclusion based on a sample may be d
would reach if they examined every item in the population
● Can be reduced by increasing the sample size
Nonsampling Risk
● Risk of erroneous conclusions due to any factor other than the
○ Ex: auditor does not perform the right procedures; aud
the supporting documentation
● Can be reduced to low levels through effective planning and s
LO 9-2 DIstinguish between statistical and nonstatistical sampling
Types of Sampling
Nonstatistical sampling
● Using judgment to plan, perform, and evaluate the sample
● The auditors estimates sampling risk by using professional jud
techniques
● Provides no meaning of quantifying sampling risk
● Sample may be larger than necessary (insufficient) or auditors
than acceptable degree of sampling risk
Statistical Sampling
● Using mathematics and statistics plan, perform, and evaluate
● Allows auditors to measure and control sampling risk which he
● Advantages
, ○ Random number tables
○ Systemic selection
■ Sometimes may result in a biased sample
● For example, in some circumstances wh
random order
Other methods of Sample Selection
Other methods
● Haphazard selection
○ Select items on an arbitrary basis, without any conscio
● Block selection
○ Block sample consists of all items in a selected time pe
alphabetical sequences
Stratification
● Techniques of dividing population into relatively homogeneous
● Common to stratify when using sampling for substantive proce
○ Don't want to accept sampling risk on anything individu
● The auditors will typically not accept sampling risk for any item
misstate the population as well as other items considered to b
error or fraud - the AICPA audit sampling guide refers to these
○ For that reason, auditors will test every item with book
misstatement and other high risk items.
■ Tolerable misstatement is equal to or less th
the account
Unrestricted random selection
● Every sampling unit in the population has an equal chance of
sample
LO 9-4 Understanding the different types of sampling plans used in auditing
Types of Statistical Sampling Plans
● Attributes sampling
○ The type of sampling plan used in tests of controls to e
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