Audit Sampling

 Audit Sampling

Source: https://www.youtube.com/watch?v=p4cYBUVe9Is

Published by Darcy Becker on Jan 2, 2012

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.

Sampling risk	Non - sampling risk
This risk that the auditor reaches an incorrect conclusion because the sample chosen is not representative of the population from which it was drawn	This risk that the auditor reaches an incorrect conclusion for any reason not related to sampling risk
The proper sampling method was selected and applied but failed to uncover material misstatements such as unlucky	Results from auditor failure (lack of due care)
It occurs because of the nature of sampling. Auditors can reduce sampling risk but cannot eliminate it entirely	Failure to apply effective or appropriate procedures like doing the wrong procedure
Sampling risk can be reduced by giving every item an equal chance of selection and/or increasing sample size	Non-sampling risk can be reduced by increasing auditor competence and enhancing supervision of staff.

             

           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:

Statistical Method	Non-Statistical Method
The results are objective and defensible because they are clear mathematical results.	Avoids the time-consuming and expensive preparatory work and population studies that are required for statistical sampling.
The audit work is more consistent (less likely to decrease the sample size base on a time budget)
Sampling error, also known as further possible misstatements (FPM), can be quantified
Avoids over-auditing. Typically for the non-statistical method, there is a tendency to over-audit in case the sample size is too small.
Not auditor-specific	Allows for the auditor’s experience and judgment for example more flexible