STUDY UNIT 11
AUDIT SAMPLING
The purpose of audit sampling:
Provide a reasonable basis for the auditor to draw conclusions about the whole
population from which the sample is selected.
The auditor must:
obtain audit evidence to reach a conclusion on the fair presentation of the
financial statements
strive to perform a cost-e ective audit for the client
not audit each item, but only certain that were selected (we do however form an
opinion on the total population)
Important definitions
Population The entire set of data on which the auditor wishes to draw a
conclusion (total number of transactions / observations)
Sampling Application of audit procedures to less than 100% of the items
within an account balance or class of transactions to enable the
auditor to form opinion on whole population.
Sampling unit The individual items selected from population on which the audit
procedures are performed.
Error Test of controls - Deviation (weakness) from a control procedure
(the control procedure / activity has not been performed / does not
exist)
Test of detail (substantive procedure) - Rand amount of
misstatement of a transaction of balance (di erence between
actual and what it should be)
Tolerable Maximum error in population that the auditor will be prepared to
error accept, whilst still reaching conclusion that result from sample
achieved audit objective (TOC %, SP R)
Anomalous Misstatement / deviation (error) that is not representative of those
error misstatements/deviations in a population
Stratification Dividing population into sub-populations with similar
characteristics (e.g. Rand amount)
Methods of selecting items for testing
Selecting al the Used where:
items (100% test) population consists of a small number of high value items
there is exceptionally high inherent- and control risks
(auditor want to reduce detection risk to a minimum)
100% audit will be more cost-e ective
Computer-assisted audit techniques (CAAT’s) could be
used e ectively
AUDIT SAMPLING
The purpose of audit sampling:
Provide a reasonable basis for the auditor to draw conclusions about the whole
population from which the sample is selected.
The auditor must:
obtain audit evidence to reach a conclusion on the fair presentation of the
financial statements
strive to perform a cost-e ective audit for the client
not audit each item, but only certain that were selected (we do however form an
opinion on the total population)
Important definitions
Population The entire set of data on which the auditor wishes to draw a
conclusion (total number of transactions / observations)
Sampling Application of audit procedures to less than 100% of the items
within an account balance or class of transactions to enable the
auditor to form opinion on whole population.
Sampling unit The individual items selected from population on which the audit
procedures are performed.
Error Test of controls - Deviation (weakness) from a control procedure
(the control procedure / activity has not been performed / does not
exist)
Test of detail (substantive procedure) - Rand amount of
misstatement of a transaction of balance (di erence between
actual and what it should be)
Tolerable Maximum error in population that the auditor will be prepared to
error accept, whilst still reaching conclusion that result from sample
achieved audit objective (TOC %, SP R)
Anomalous Misstatement / deviation (error) that is not representative of those
error misstatements/deviations in a population
Stratification Dividing population into sub-populations with similar
characteristics (e.g. Rand amount)
Methods of selecting items for testing
Selecting al the Used where:
items (100% test) population consists of a small number of high value items
there is exceptionally high inherent- and control risks
(auditor want to reduce detection risk to a minimum)
100% audit will be more cost-e ective
Computer-assisted audit techniques (CAAT’s) could be
used e ectively
