Question

To determine if a sample is truly representative of the population, an auditor would be required to: ​use systematic sample selection. ​audit the entire population. ​never use sampling because of the expense involved. ​conduct multiple samples of the same population.

Answer 1

Step 1

Definition of Audit Sampling

Audit Sampling is the use of an audit procedure on a selection of the items within an account balance or class of transactions. The sample method used should yield an equal probability that each unit in the sample could be selected. The intent behind doing so is to evaluate some aspects of the information. Audit sampling is needed when population sizes are large, since examining the entire population would be highly inefficient and expensive. There are multiple ways to engage in audit sampling.

The following method of sampling can be used in audit

1. Random sampling: In this method a random number generator is used to make selection. This approach is the most theoretically correct, but require more time to make selection.

2. Stratified Sampling: Under this method, the auditor splits the population into different sections, such as high value and low value and then selects from each section.

3. Haphazard sampling: There is no structured approach to how items are selected. However, the person doing the selections will probably skew the selections, so the selections are not truly random

4. Block sampling: A consecutive series of items are selected for review. Though this approach may be efficient, there is a risk that a block of items will not reflect the characteristics of the entire population.

5. Personal judgment: The auditor uses her own judgment to select items, perhaps favoring items that larger monetary values or which appear to have a higher level of risk associated with them.

6. Systematic Sampling: Under this method selection are taken from the population at fixed intervals, such as every 10th item. This tends to be a relatively efficient sampling technique.

   From above, it is clear that auditor can select any method of sampling to determine true representative of the population. But every method has some risks. Auditor use sampling mainly because they are not seeking absolute certainty as they are looking for reasonable assurance as examining all data may still not provide absolute certainty. The argument regarding the completeness assertion will be important because even if auditor audit every thing, still he don't know whether there is any missing transaction in the general ledger or record which remained unaudited.

Hence, Auditor has to make his personnel judgement which should be appropriate for audit.