SAMPLING

Sampling is important to the auditor because:

 It is seldom that an auditor can examine/audit

every item in a population (for example auditing
each sales invoice for all sales transactions that
Introduction: occurred during the financial period)
Sampling
 In other words, it is impossible for the auditor to
look at everything, but he/she can look at a
sample.
 Sampling is a method used by the auditor to obtain
information that will permit an estimate of the
value or quantity of a population by examining only
a portion of the population.
What is
sampling?  (ISA 530 – Definition) - Audit sampling involves
the application of audit procedures to less than
100% of the items within a population of audit
relevance such that all sampling units have a
chance of selection in order to provide the
auditor with a reasonable basis on which to draw
conclusions about the entire population.
 What is An important aspect of sampling is that the results
of the tests on the sample must be extrapolated or
sampling? generalised over the population as a whole. The
sample used by the auditor should be
representative of the population (the sample must
have the same characteristics as those of the
population).
Purpose of
To gather audit evidence from the audit
sampling procedures being performed without testing the
entire population.
 When should the auditor apply the sampling
technique

 When the nature and materiality of the balance or class of transactions does
not demand a 100% audit;

 When the time and cost to audit 100% of the population would be too great
 According to ISA 530 population is defined as a set
of data from which a sample is selected and about
What is which the auditor wishes to draw conclusions. A
population population can be divided into strata, or sub-
populations, with each stratum being examined
separately.
  Sampling unit –the  Non-sampling risk – the
individual items risk that the auditor
constituting a population. reaches an erroneous
conclusion for any reason
not related to sampling
Important  Sampling risk – The risk
that the auditor’s
risk.

terms in conclusion based on a

sample may be different  Anomaly - A misstatement
sampling from the conclusion if the or deviation that is
entire population were demonstrably not
subjected to the same representative of
audit procedure. misstatements or
deviations in a population.
 Sampling can be statistical or non-statistical
Types of
audit The difference between statistical and non-
statistical sampling is that statistical sampling
sampling applies probability theory and non-statistical
sampling is dependent on the auditor’s judgement.
 Statistical sampling includes methods such as:

 Random sampling method

 Systematic sampling method
Types of  Monetary unit sampling method
audit
Non-statistical sampling includes methods such
sampling as:
 Haphazard sampling method
 Block sampling method
 Statistical sampling advantages:
 Provides a more strong expression of the test results;
 Provides for quantitative evaluation of the sample
results; and
 Provides for more objective recommendations for
management
Statistical
sampling Statistical sampling disadvantages:
 Requires random sample selection which may be more
costly and time consuming; and
 Might require additional training cost for staff
members to use statistics.
Non-statistical sampling advantages:
Non-
 statistical
Allows the auditor to add his/her subjective judgement in determining the
sample size which may result in selection process to audit items of highest
sampling
value and higher risk; and
 May be designed so that it is equally effective and efficient as statistical
sampling while being less costly.
 Non- sampling disadvantages:
Non-statistical
statistical
 Cannot draw objectively valid statistical inferences from the sample results;
sampling
and
 Cannot quantitatively measure and express sampling risk.
 Both statistical and non-statistical sampling
methods apply the same process in selecting the
sample and the process is as follows:

Sampling 1. Planning the sample

process 2. Selecting the sample
3. Performing the tests
4. Evaluating the results
 1. Determine the objectives of the procedures
2. Determine the procedures to be performed
3. Confirm that the population is appropriate
Steps in the and complete
sampling 4. Define the units of the population
process 5. Determine the sample size
6. Select the sample
7. Perform the audit procedures
 Before the auditor undertake a sampling exercise,
QUIZ he/she should ensure that the population from
which the sample size is to be drawn, conforms to
two characteristics.
Name these characteristics…
 The auditor must ensure that the population is
ANSWER  Appropriate for the objective of the audit
procedure and
 Complete
QUIZ TRUE/FALSE
All audit procedures should be conducted on a
sample basis?
ANSWER
FALSE
THANK YOU