- Statistical sampling: any approach to sampling that has the following characteristics:
- Random sample selection
- Use of probability theory to evaluate sample results, including measurement of sampling risk.
- Major advantage of statistical sampling over non-statistical sampling methods is defensibility, thorough quantification of sampling risk.
Non-statistical sampling - Non-statistical sampling: sampling approaches that do not have all the characteristics of statistical sampling.
- Major advantage of non-statistical sampling is greater application of audit experience.
- The basic principles and essential procedures identified in ASA 530 (ISA 530) apply equally to both statistical and non-statistical sampling.
- Auditor must consider:
- Objectives of the audit test (usually related to an audit assertion of interest)
- Population from which to sample
- Possible use of stratification
- Definition of the sampling unit.
Defining the audit objective and population - Once the audit objective is specified, such as reliance on controls or misstatement of account balance, the auditor must consider what conditions would constitute an error.
- The auditor must ensure that the population from which the sample is to be selected is complete and appropriate to the audit objective.
Stratification - Stratification: occurs when the auditor divides the population into a series of sub-populations, each of which has an identifying characteristic, such as dollar value.
- Can assist with audit efficiency as it allows the auditor to reduce the sample size by reducing variability, without increasing the sampling risk.
- Can direct auditor’s attention to areas of audit interest, especially risky or material items.
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