Question

10.22

EASY  You are the audit manager on the audit of Whirlpool Ltd for the year ended 30 June 2018 and your new audit graduate, Otto Gray, has selected the four weeks in May to test for payroll.

REQUIRED

Explain to Otto why the sample selection method adopted is not appropriate.

Answer 1

Disadvantages of sampling

The reliability of the sample depends upon the appropriateness of the sampling method used. The purpose of sampling theory is to make sampling more efficient. But the real difficulties lie in selection, estimation and administration of samples.

Disadvantages of sampling may be discussed under the heads:

• Chances of bias
• Difficulties in selecting truly a representative sample
• Need for subject specific knowledge
• changeability of sampling units
• impossibility of sampling.

1. Chances of bias

The serious limitation of the sampling method is that it involves biased selection and thereby leads us to draw erroneous conclusions. Bias arises when the method of selection of sample employed is faulty. Relative small samples properly selected may be much more reliable than large samples poorly selected.

2. Difficulties in selecting a truly representative sample

Difficulties in selecting a truly representative sample produces reliable and accurate results only when they are representative of the whole group. Selection of a truly representative sample is difficult when the phenomena under study are of a complex nature. Selecting good samples is difficult.

3. In adequate knowledge in the subject

Use of sampling method requires adequate subject specific knowledge in sampling technique. Sampling involves statistical analysis and calculation of probable error. When the researcher lacks specialized knowledge in sampling, he may commit serious mistakes. Consequently, the results of the study will be misleading.

4. Changeability of units

When the units of the population are not in homogeneous, the sampling technique will be unscientific. In sampling, though the number of cases is small, it is not always easy to stick to the, selected cases. The units of sample may be widely dispersed.

Some of the cases of sample may not cooperate with the researcher and some others may be inaccessible. Because of these problems, all the cases may not be taken up. The selected cases may have to be replaced by other cases. Changeability of units stands in the way of results of the study.

5. Impossibility of sampling

Deriving a representative sample is di6icult, when the universe is too small or too heterogeneous. In this case, census study is the only alternative. Moreover, in studies requiring a very high standard of accuracy, the sampling method may be unsuitable. There will be chances of errors even if samples are drawn most carefully.