Audit sampling involves the application of substantive or compliance procedures to less than 100% of items within an account balance or class of transactions to be enable the auditor obtain and evaluate some characteristics of the balance and form a conclusion concerning that characteristic.


This refers to the entire set of data from which a sample is selected and about which the auditor wishes to draw conclusions. E.g. all items in an account balance or class of transactions constitute a population. The individual items that make up the population are known as sampling units.

Sampling risk

This arises from the possibility that the auditor’s conclusion based on the tests performed on the selected sample may be different from the conclusion reached if the entire population was subjected to the same procedure.

Non sampling risk

Arises from factors that cause the auditor to reach an erroneous conclusion for any reason not related to the size of the sample e.g. use of inappropriate audit procedures leading to failure to identify an error.

Tolerable error

Refers to the maximum error in the population that the auditor is willing to accept and still conclude that the results from the sample have achieved the audit objective. Tolerable error is considered during the planning stage and is related to the auditor’s judgment on materiality. The smaller the tolerable error the larger the sample size.

Confidence level

Refers to the degree of confidence that the auditor requires that the results of the sample are indicative of the actual error in the population.


This is the process of dividing the population into sub-populations so that items within each sub population are expected to have similar characteristics in certain aspects e.g. same monetary value.

Why auditors adopt a sampling approach

A complete check of all transactions and balances of a business is no longer required by/ of an auditor. The reasons are:

a. Economic - The cost in terms of expensive audit resources would be prohibitive.

b. Time - The complete check would take too long such that financial accounts would be of no use by the time the audit is completed.

c. Practical - Users of accounts do not expect or require 100% accuracy. Materiality is important in auditing as well as in accounting.

d. Psychological - A complete check would so bore the audit staff and their work would end up being ineffective.

e. Fruitfulness: A complete check would not add much to the worth of figures if, as would be normal, a few errors are discovered. The emphasis of audits should be on completeness of record and their true and fair view.

The objective of auditing sampling is to enable the auditor carry out procedures designed to obtain sufficient appropriate audit evidence to determine with reasonable confidence whether the financial statements are free of material misstatement.

f. The use of sampling with properly thought out objectives and properly constructed tests allows more valid conclusions to be reached than when as many transactions as possible are test

ed. This is because detailed testing is carried out on the sample units.use of sampling enables the auditor to give more precise information to the client in the management letter.