Audit sampling is a procedure that involves application of audit tests to less than 100% of the items within a particular population to enable the auditor to draw a conclusion concerning the entire population.
Sampling risk – Risk that auditor‘s conclusion based on the sample may be different from the one he could have arrived at, had he examined the entire population
Non Sampling Risk – Risk auditor may use inappropriate procedures or misinterpreted evidence hence fail to detect/recognize the error.
Factors to consider when determining sample size
1. Population
2. Nature of transactions – They should be similar and homogenous for the audit to use the same audit test.
3. Sampling method.
4. Audit objective.
5. Materiality levels and risk exposure – Any sample selected should be of material items.
6. Confidence level
7. Time and cost involved in carrying out sampling.
Sampling methods and techniques
1. Systematic sampling.
2. Radom sampling.
3. Stratified sampling.
4. Attribute sampling.
5. Cluster sampling.
6. Block sampling.
7. Multi stage sampling.
