A number of sample selection methods are available to the auditor.
I.Random selection
Simple random sampling is a method of selection in which every item in population has the same statistical probability of being selected as every other item. This method of sampling ensures that all items within a population stand an equal chance of selection by the use of random number tables or random number generators.
II.Systematic selection
A number of sampling units in the population is divided by the sample size to give a sampling interval.The starting point for the sample can be generated randomly.
Example
For example, if a population to be sampled is 600 items and the sample size is 50 the sampling interval will be 12. The starting point may be selected haphazardly or randomly. Systematic selection is particularly useful when sampling from non-monetary populations, for example despatch notes.
Example
You are the auditor of Jones Co and are undertaking substantive testing on the sales for the year ended 31 December 2010. You have established that the ‘source’ documentation that initiates a sales transaction is the goods dispatch note and you have obtained details of the first and last goods dispatched notes raised in the year to 31 December 2010, which are numbered 10,000 to 15,000 respectively.
The random number generator has suggested a start of 42 and the sample size is 50. You will therefore start from goods dispatch note number (10,000 + 42) 10,042 and then sample every 100th goods dispatch note thereafter until your sample size reaches 50.
III.Block sampling
Block sampling is a method in which a number of adjacent transactions or items will be selected.
All sales invoices are selected in a particular week, or all receivables with a name beginning with a particular letter.
The auditor may only examine invoices that are numbered 300 to 340.
IV. Haphazard selection
This is a selection process in which the auditor attempts to give all items in a population a chance of being selected by choosing items according to judgement.
Care must be taken by the auditor when adopting haphazard sampling to avoid any conscious bias or predictability. The objective of audit sampling is to ensure that all items that make up a population stand an equal chance of selection. This objective cannot be achieved if the auditor deliberately avoids items that are difficult to locate or deliberately avoids certain items.
V. Monetary unit sampling
The method of sampling is a value-weighted selection whereby sample size, selection and evaluation will result in a conclusion in monetary amounts. The objective of monetary unit sampling (MUS) is to determine the accuracy of financial accounts.
Here’s an example of how monetary unit sampling works. The audit client’s accounts receivable book value is $300,000, and the sample size is set at 96 records.
- Figure the sampling interval by dividing book value by sample size (300,000/96).
- Arrange the client’s accounts receivable in an ordered list using some sort of ordering sequence.
For example, you can arrange them alphabetically by customer name or numerically by customer number.
- Pick a random number between 1 and 3,125.
Statistical versus non-statistical sampling
| Statistical sampling: | Non-statistical sampling: |
| Random sampling | Haphazard sampling |
| Systematic sampling | Block selection |
| Monetary unit sampling |
Practical Question
The first item is chosen randomly ( a number between 1 and $351,000), in this case 233. Each item after that is selected by adding the sampling interval to the last value, until six items have been selected.
Source :
1.BPP University, F8 and FAU
2.Kaplan, Inc., F8 and FAU