Audit Sampling
Title: Introduction to Sampling
Audit sampling is the application of
audit procedures to less than 100% of items in the population have the same
chance to be selected. From these sample, auditors can draw their conclusion
and express their opinion based on their predetermine objective.
Audit
sampling is very vital no matter it is financial audit, internal audit and
others kind of audit still need to be used by auditors. Audit sampling also
part of the audit standards requirements and it could help auditors to meet
their objective with less effort by gathering the sufficient and appropriate
audit’s evidence to make the audit’s opinion. That mean auditor is not require
to check 100% of object or items to let them express their opinion. The
selection process and methods should not involve too much of human judgments
and avoid bias from auditors. In general, the audit sampling can be performed
in two different types : statistical and non-statistical sampling.
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Sampling
risk
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Non
- sampling risk
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This
risk that the auditor reaches an incorrect conclusion because the sample
chosen is not representative of the population from which it was drawn
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This
risk that the auditor reaches an incorrect conclusion for any reason not
related to sampling risk
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The
proper sampling method was selected and applied but failed to uncover
material misstatements such as unlucky
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Results
from auditor failure (lack of due care)
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It
occurs because of the nature of sampling. Auditors can reduce sampling risk
but cannot eliminate it entirely
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Failure
to apply effective or appropriate procedures like doing the wrong procedure
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Sampling
risk can be reduced by giving every item an equal chance of selection and/or
increasing sample size
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Non-sampling
risk can be reduced by increasing auditor competence and enhancing
supervision of staff.
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In
general, the audit sampling can be performed in two different types : statistical
and non-statistical sampling. The statistical approach uses
computer-based technology to come up with sample size numbers and randomly
select items from the population. The judgmental approach, on the other hand,
employs the auditor’s judgment and experience to come up with a sample size.
There are advantages and disadvantages to using each method:
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Statistical Method
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Non-Statistical Method
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The
results are objective and defensible because they are clear mathematical
results.
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Avoids
the time-consuming and expensive preparatory work and population studies that
are required for statistical sampling.
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The
audit work is more consistent (less likely to decrease the sample size base
on a time budget)
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Sampling
error, also known as further possible misstatements (FPM), can be quantified
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Avoids
over-auditing. Typically for the non-statistical method, there is a tendency
to over-audit in case the sample size is too small.
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Not
auditor-specific
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Allows
for the auditor’s experience and judgment for example more flexible
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