## SA 530: Audit Sampling vs. Selecting Specific Items

### Critical Distinction

These are two entirely different methods for choosing items to test, yet they are frequently confused.

### Audit Sampling (SA 530)

Application of audit procedures to less than 100% of items within a population
Key requirement: All sampling units must have an equal chance of selection
Results are projected onto the entire population
Subject to sampling risk — the risk that the conclusion drawn from the sample differs from the conclusion that would be reached by testing the entire population

### Selecting Specific Items

The auditor handpicks particular items based on judgment
Items chosen do NOT represent the entire population
NOT audit sampling — results cannot be statistically projected
Subject to non-sampling risk only

### Types of Specific Items Typically Selected

Type	Rationale
High value / key items	High value, suspicious, unusual, risk-prone, or history of error
All items over a certain amount	Verify a large monetary proportion of the balance
Items to obtain information	Understand the nature of the entity or specific transactions

### Sampling Risk vs. Non-Sampling Risk

Sampling risk: Risk that the sample is not representative (can be reduced by increasing sample size).

Non-sampling risk: Risk of erroneous conclusion due to reasons unrelated to sampling — e.g., using an inappropriate audit procedure, misinterpreting evidence, or failing to recognise an error. Selecting specific items is subject only to non-sampling risk.

Worked example

### Example 1

Scenario: An articled clerk observes that a senior auditor selected the following items for testing in a ₹25 crore company:

All items under 'Machinery Repair & Maintenance' (expenditure increased significantly YoY)
Purchases from related parties amounting to ₹5 crores
All individual items exceeding ₹5 lakhs
A ₹0.50 lakh entry under 'Legal Expenses' to understand the purpose

The clerk believes this is 'audit sampling.'

Analysis: This is NOT audit sampling. The senior auditor is selecting specific items — high-value items, risk-prone items (related party purchases, unusual increase), and items for information. None of the items were selected with every item having an equal chance of selection.

This approach is subject to non-sampling risk only. A wrong conclusion could arise if the auditor used an inappropriate procedure, not because the sample was unrepresentative.

⚠️ Common exam mistakes

Calling any less-than-100% testing 'audit sampling' — it is only audit sampling if every item had an equal chance of selection.
Thinking specific-item selection is inferior — it is a legitimate and often more efficient approach when targeted at high-risk items.
Forgetting that specific-item testing results cannot be projected onto the rest of the population — the auditor obtains evidence only about the selected items.
Misidentifying non-sampling risk — it is any risk of wrong conclusion NOT due to sampling, including use of wrong procedures or misinterpretation of evidence.

Bare-Act text Definitions — Audit Sampling and Non-Sampling Risk · SA 530 – Audit Sampling · click to expand

Audit Sampling refers to the application of audit procedures to less than 100% of items within a population relevant under the audit such that all sampling units have an equal chance of selection. Non-sampling risk is the risk that the auditor may reach an erroneous conclusion for any reason not related to sampling risk.

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SA 530 – Audit Sampling vs. Selecting Specific Items

Worked example

⚠️ Common exam mistakes