Chapter 09
Audit Sampling

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9-1

What is Audit Sampling?




Applying a procedure to less than
100% of a population
To estimate some characteristic of the population Qualitative
 Quantitative


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9-2

Risk


Sampling risk




risk that the auditors’ conclusions based on a sample may be different from the conclusion they would reach if they examined every item in the population

Non-sampling risk risk pertaining to non-sampling errors
 Can be reduced to low levels through effective planning and supervisions of audit engagements 

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9-3

Non-statistical Sampling






The auditor estimates sampling risk by using professional judgment rather than statistical techniques
Provides no means of quantifying sampling risk
Sample may be larger than necessary or auditors may unknowingly accept a higher than acceptable degree of sampling risk

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9-4

Advantages of Statistical
Sampling


Allows auditors to measure and control sampling risk which helps:
Design efficient samples
 Measure sufficiency of evidence
 Objectively evaluate sample results


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9-5

Selection of Random Sample




Random sample results in a statistically unbiased sample that may not be a representative sample
Random sample techniques
Random number tables
 Random number generators
 Systematic selection


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9-6

Random Number Table Figure
9.1

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9-7

Other Methods of Sample Selection


Other methods


Haphazard selection
 Select items on an arbitrary basis, but without

any conscious bias


Block selection
 Block sample consists of all items in a selected

time period, numerical sequence or alphabetical sequence 

Stratification


Technique of dividing population into relatively homogeneous subgroups

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9-8

An Illustration of
Stratification

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9-9

Types of Statistical Sampling Plans




Attributes sampling
Discovery sampling
Classical variables sampling
Mean-per-unit estimation
 Ratio estimation
 Difference estimation




Probability-proportional-to-size sampling

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9-10

Dual Purpose Test


Tested used both as a test of control and substantiating the dollar amount of an account balance


Ex. Test to evaluate the effectiveness of a control over recording sales transactions and to estimate the total overstatement or understatement of the sales account

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9-11

Allowance for Sampling