Sampling

Question 1

Define audit sampling

Answer 1

Audit sampling involves reviewing less than 100% of the items within a specific group in order to evaluate a characteristic. When would an auditor find it feasible to collect 100% of the information? When the population is small.

This allows the auditor to eliminate any sampling problems.

However, since the population is usually too large to examine all the items, auditor must examine a sample. The sample must be representative. In other words typical of the population in order to prepare statistical inferences.

SAS 39 – establishes several specific requirements that apply when using statistical and non-statistical sampling.

SAS 111 (Amendment to SAS 39) provides technical amendments and definitions.

Question 2

Statistical Sample

Answer 2

The sample size is based on the rules of probability. The scientific and mathematical approach offers a means of measuring the sufficiency and competency of the evidence obtained and objectively evaluating the results.

Question 3

Non-statistical Sample

Answer 3

It does not provide a means to generalize the results to the population. It may help the auditor gain insight into a problem or explore some relationships between the sample and the population. They are not good for testing hypotheses and issues because they are subject to biases.

Question 4

Audit Sampling Applications

Answer 4

Test of details of account balances (confirmations)

Test of details of transactions (vouching expenditures)

Tests of controls (inspecting documents that support transactions for performance of controls)

Tests of compliance with laws and regulations (inspecting documents supporting expenditures charged to grants for compliance with laws or regs)

Question 5

What are the Advantages and Disadvantages of Statistical vs. Judgmental Sampling

Answer 5

Advantages

Sample result is objective and defensible

Provides a means of advance estimation of sample size

Provides estimate of sampling error

May provide more accurate method of drawing conclusions

May save time and money

Objective evaluation of test results

Disadvantages

Costs more money to train auditors

Number of items selected may be higher than compared to a judgmental sample

Reliance on stat sampling does not take into account auditor knowledge/experience