In an organization or company, audit sampling is a process that needs to be carried out in checking all existing information in accordance with audit standards.
Audit sampling itself is an effort that not only reduces costs, but also reduces resources where in the implementation the auditor will take a small part of the data to be tested.
Sampling of the entire population allows auditors to examine financial statements for errors and possible misstatement risks.
This article will discuss the basics and some things to know as an overview of how an auditor works in taking audit samples.
What Is Audit Sampling?
Audit sampling is a method of taking and investigating a small part of the sample from the overall number to be tested and then used as a benchmark for the conclusion of the overall population.
This sample testing procedure allows the auditor to obtain evidence that leads him to draw conclusions without having to examine each item of existing data.
This certainly increases the effectiveness and efficiency of the work and saves audit costs because there is no need to identify it as a whole.
Types of Audits
As an important component to evaluate the credibility of financial information, the scope of audit sampling is divided into three, namely:
- Internal audit, which is carried out by the internal of an organization, such as within the scope of employees. So that the evaluation process and audit results are not distributed outside the company. However, these audits are potentially affected by conflicts of interest.
- External Audit, it is carried out by a party that can give an opinion in a fair and impartial way, making it possible to avoid fraud.
- Government Audit, implemented by government tools to carefully evaluate government financial data, such as on corporate taxpayer reports listed on the stock market.
Read Also: 7 Differences between Internal and External Audit, Let's Know!
Audit Sampling Method
In taking audit sampling to form conclusions and provide opinions in accordance with the objectives set without evaluating the entire population, there are two methods that can be done. Among them are:
1. Statistical Audit Sampling
This method carries out statistical or random sampling to be tested. This is generally done on data with a high number of populations, complete and accurate as a whole, homogeneous items, and allows for random selection.
In this case, each 1:100 item has an equivalent probability of being retrieved and verified for accuracy, which however will still make it easier for auditors because there is no need to check the entire data.
2. Non-Statistical Audit Sampling
This method is the opposite, where the sampling is not done randomly, but relies on the ability and judgment of the auditor.
In addition to the auditor's judgment, the results of the audit also can not be used to represent the entire population. This is because the data tested by this method must be unequal, impossible to select at random, or there is no complete and accurate list of all items.
Not like on statistical audit which 10 items can give conclusions from 100 data, methods non-statistical audit sampling is selected by the auditor based on provisions, such as transaction values totaling more than 100,000, specifications of items related to a company, and others.
Purpose Of Audit Sampling
- Provide sufficient evidence for the auditor to derive conclusions from the entire item by testing a small portion of the population
- Improve efficiency and save audit costs and resources used
- Provide a basis for concluding opinions with a certain degree of stability in the population
- Check the accuracy and completeness of the data and identify errors or discrepancies that may occur
- Ensure auditors conduct audits in accordance with their standards
- Become a tool to investigate all audit-related information
Stages Of A Sample Audit
1. Setting Sampling Goals
Determining the purpose of sampling means setting the purpose of the audit itself. An auditor needs to ensure that the data identified is in accordance with audit standards, for example, anyone involved in the audit process.
2. Identifying The Population
Before establishing a sample, the auditor needs to review its population because the audit process will only take a portion of the overall data.
This allows the auditor to consider important aspects within the population, such as the scope and area to be audited so that the auditor can determine the extent of sampling.
3. Choosing A Sampling Method
At this stage, the auditor can decide which method to use to collect samples. Will be based on the auditor's consideration with non-statistical, or by a random method with statistical method.
If the auditor uses a statistical sample, it is necessary to ensure that the characteristics of the entire population are accurate and complete, allow for randomization, and are homogeneous.
That's because sampling with statistical methods will only bring up two possibilities, true or false. It is therefore necessary to identify the population before choosing a method.
Likewise, when the auditor decides to take a sample based on his assessment of all the data, it is necessary to consider the experience in the scope of the audit, the complex requirements to achieve the objectives of the audit, weigh the complexity of the interaction and management system of the institution, assess changes in technology, and much more.
4. Determining The Size Of The Sample
Auditors must be skilled in determining the amount of samples to be reviewed based on the time given.
Even with limited time, auditors are expected to be able to create a realistic sample size so that the audit process can run optimally.
5. Conduct A Sample Audit
Auditors with all strategies that have been prepared to ensure the credibility of the audit process continues to run as planned by remaining flexible to changes that remain measurable in the audit success benchmark.
Case Study Examples
For example, an auditor is doing calculations on an organization that has 50,000 transactions in one year. In this case the auditor sets 500 samples for the entire population.
On random data retrieval
If in 500 samples of 50,000 transactions 5 transaction errors are identified, then the picture of the discrepancy is 1% (5/500 of 100%) which is then projected on the entire number of 50,000 transactions. So that from 1% of 50,000 shows that out of 50,000 transactions, there are likely to be 500 transactions that do not match.
On non-statistical data retrieval
If 500 samples are taken out of 50,000 it is based on transactions related to one particular company. After identification, the auditor found 2 transactions that did not match. After testing each transaction with a sample and testing for discrepancies, the auditor with his judgment and capabilities can determine the intended discrepancies and decide to take appropriate measures in accordance with his needs.
Conclusion
Audit sampling as a tool that makes it possible to identify less than 100% of the entire relevant data allows the auditor to draw conclusions without having to review all the information.
The audit process requires an important focus on high scope, qualified capabilities, and of course all the required data is met.
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