Page 112 - DCOM509_ADVANCED_AUDITING

Dilfraz Singh, Lovely Professional University
Unit 7: Audit Sampling

Unit 7: Audit Sampling Notes

CONTENTS
Objectives
Introduction

7.1 Meaning and Definition of Audit Sampling
7.1.1 Purpose of Audit Sampling
7.1.2 Techniques for Audit Sampling

7.2 Sampling Risk
7.3 Meaning and Definition of Sampling Error
7.3.1 Types of Sampling Errors
7.4 Statistical vs. Non-Statistical Sampling
7.5 Designing a Sampling Application

7.6 Summary
7.7 Keywords
7.8 Review Questions

7.9 Further Readings
Objectives

After studying this unit, you will be able to:
 Define audit sampling and sampling error
 Understand the techniques for audit sampling

 Analyze and differentiate between the different types of sampling errors
 Design a sampling application

Introduction

Sampling is the application of an audit procedure to less than 100% of the items within an
account balance or class of transactions for the purpose of evaluating some characteristic of all
the items within the balance or class of transactions.
Much of the information included in this manual was taken from the Statement on Auditing
Standards No. 39 on Audit Sampling which provides guidance on the use of sampling in an audit
of financial statements. This information has been adapted to fit the circumstances most often
encountered in tax auditing.

7.1 Meaning and Definition of Audit Sampling

Audit sampling can be defined as the process of applying auditing procedures to under 100% of
different items in an organization’s account balance in a way that every single unit might have
an equal probability of being selected.

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