## Stratification
Dividing a population into discrete sub-populations (strata) to improve audit efficiency.
Objective: Reduce variability within each stratum → allows sample size to be reduced without increasing sampling risk.
### Common Stratification Approaches
| Basis | Rationale |
|---|---|
| Monetary value | Directs effort to larger items — higher potential for overstatement |
| Risk characteristic | E.g., age of receivables when testing valuation assertion (ROMMS-driven) |
---
## Value Weighted Selection
- Sampling unit = individual monetary units within the population (not individual transactions)
- Items with higher value have proportionally greater chance of selection → audit effort flows to larger items
- Can result in smaller sample sizes
- Most efficient when combined with systematic random selection
### Key distinction
> Stratification divides the population before sampling. Value weighted selection is a selection method applied within a population or stratum — the two are complementary, not alternatives.