In auditing, sampling is the process of selecting a subset of items or transactions from a population for the purpose of testing and evaluating the population. Sampling is used in auditing to provide the auditor with sufficient appropriate audit evidence to support the audit opinion, while avoiding the need to test and evaluate the entire population.
There are two types of sampling methods used in auditing: statistical sampling and non-statistical sampling. Statistical sampling involves the use of mathematical techniques and probabilities to determine the sample size and the selection of items in the sample. Non-statistical sampling involves the use of the auditor’s professional judgment to determine the sample size and the selection of items in the sample.
In statistical sampling, the sample size and the selection of items in the sample are determined based on the auditor’s desired level of precision and the expected population characteristics, such as the expected mean and the expected standard deviation. The auditor uses statistical formulas and tables to determine the sample size and the selection of items in the sample, and to evaluate the results of the sample.
In non-statistical sampling, the sample size and the selection of items in the sample are determined based on the auditor’s professional judgment and experience, taking into account the nature of the population, the auditor’s assessment of the risks of material misstatement, and the auditor’s overall audit strategy. The auditor uses the sample to evaluate the population, and may use statistical techniques to evaluate the results of the sample.
Overall, sampling is an important concept in auditing, as it allows the auditor to obtain sufficient appropriate audit evidence to support the audit opinion, while avoiding the need to test and evaluate the entire population. The use of sampling in auditing requires the auditor to have a deep understanding of statistical techniques and probabilities, as well as the ability to use professional judgment and experience to determine the sample size and the selection of items in the sample.
Impact on audit work
For a small population it may be difficult to use statistical sampling, so we would normally use our judgement to pick the sample size and items, mainly picking risky/large items as well as a few other small items to ensure we cover a cross section of the population.
For a large population we would normally use the sample calculator to calculate the sample size, after selecting large and risky items. The results of the sample test can then be projected to the population.
