## Audit Sampling – Overview and Approaches (SA 530)
### 1. What is Audit Sampling?
Audit sampling means applying audit procedures to less than 100% of items in a population so that all sampling units have a chance of selection, and the auditor can draw a conclusion about the entire population.
> The sample must be representative of the population – every item should have an equal (or known) chance of being selected.
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### 2. Where Sampling is Applied
| Procedure Type | What it Tests | What it Identifies |
|---|---|---|
| Test of Controls | Internal controls | Deviations in control operation |
| Substantive Testing (Test of Details) | Account balances / transactions | Misstatements (amount, classification, presentation) |
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### 3. Key Definitions
- Population – The entire set of data from which the auditor wishes to sample (must be complete and appropriate for the audit objective)
- Sampling Unit – The individual items that make up the population (e.g., individual debtor accounts within the debtors ledger)
> Population completeness matters: If testing existence of credit sales, the population should be credit sales invoices only – cash sales must be excluded.
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### 4. Two Approaches to Sampling
#### A. Statistical Sampling
- Based on probability theory and random selection
- Each item has an equal and known chance of being selected
- Auditor can quantify sampling risk and measure confidence mathematically
- Software tools are used to determine minimum sample size given ROMM and desired confidence level
| ROMM Level | Confidence Level Required | Effect on Sample Size |
|---|---|---|
| Low | ~95% | Smaller sample |
| Medium | ~97–98% | Moderate sample |
| High | ~99% | Larger sample |
#### B. Non-Statistical Sampling
- Based on auditor's judgment and prior experience
- No mathematical measurement of sampling risk
- Example: Auditor selects the top 20 debtor accounts based on balance size
- Sampling risk cannot be quantified
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### 5. Population Characteristics
A reliable population must satisfy two qualities:
| Quality | Meaning |
|---|---|
| Appropriateness | Population matches the audit objective (right data) |
| Completeness | No items are missing (e.g., no invoice is absent from the listing) |
> External evidence (e.g., bank statements, supplier invoices) is more reliable than internal evidence as a source for sampling.