What Are Some Of The Different Types Of Sampling Methods That Are Available To The Auditor?

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Ch 12

WK4~Discussion Starter 1 posted by KIMBERLY JORDAN at Jun 15, 2015, 5:12 PM
Last updated Jun 15, 2015, 5:12 PM
What are some of the different types of sampling methods that are available to the auditor? How does the auditor decide which method to use? How will the different methods affect the audit?

Auditors can select statistical or nonstatistical methods of sampling, or a combination of the two. The choice of the method used is based on the auditor’s professional judgement, the method that would aid the auditor to determine the client is in compliance to GAAP and company policies.
The affect the statistical sampling method would have is that the sample size and the evaluation of the sample results are based on laws of probability. This method is beneficial to the auditor because it helps design efficient sampling, measure how sufficient the evidence found is, and helps to evaluate the results from the sample. The auditor is better able to control the sampling risk with statistical sampling method.
The effect nonstatistical sampling method has is that the auditor is able to select the sample size and review the information based on personal experience and subjective criteria. Because the sampling is based solely on best judgement, the sampling size may be too small in one area or too large in another. However, nonstatistical sampling may be as effective as statistical sampling if properly planned.

Specific Risks posted by KIMBERLY JORDAN at Jun 18, 2015, 5:49 PM
Last updatedJun 18, 2015, 5:49 PM
Dymesha-excellent assessment. Auditors exam a limited number of transactions during the audit process. I have had several auditors request the front and back of canceled checks for several high dollar checks or certain journal entries. As you know, uncertainties may result from various risk factors associated with audit sampling. Can you explain a couple of the types of sampling risk that could occur when performing test of controls or substantive tests? -pg 555

Re: WK4~Discussion Starter 1 posted by KIMBERLY JORDAN at Jun 18, 2015, 5:46 PM
Last updatedJun 18, 2015, 5:46 PM
Paul-great point. Everyone-an auditor will determine the sample size and evaluate the results with the laws of probability when they use statistical audit sampling. The text mentions that there are modest costs associated with this type of sampling because the auditor might have to go through training in order to use statistics for this type of sampling. Even though this method of sampling could incur modest costs-what are the primary benefits of using statistical sampling?

The sample size and evaluation of the sample is based on the laws of probability. This will help the auditor to find the best sample size to conduct an efficient audit. There is less of a chance the sample size will be too small or too large to conduct a sufficient audit. The auditor is also better able to control the sampling risk.

I think the statistical sampling method is the better choice because the information being pulled for review is based on a mathematical equation rather than best judgment. Each area’s samples will be consistent with the number of transactions the area processed; there will not be too many or too few samples reviewed. This will also mean consistency in the audit if the method is used each time.

Ch 13

WK4~Discussion Starter 2 posted by KIMBERLY JORDAN at Jun 15, 2015, 5:12 PM
Last updated Jun 15, 2015, 5:12 PM
What is the importance of defining the population when performing audit procedures? How will this affect the sample size? How will incorrectly defining the population affect the sampling unit?

It is important to define the population when performing audit procedures because it provides the basic guidelines of the type of information that will be reviewed. It provides the parameters for the audit. Population size has almost no effect on the sample size. Incorrectly defining the population would result in the incorrect
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