Factors that Affect Audit Sample Size
Lesson:
Auditors don't have the time and energy to examine everything. They need to test subsets of items, called samples.
How do auditors know how many samples to examine? In general, auditors try to balance the costs of examination with potential benefits of examination.
The greater the odds that a smaller sample size will miss something important, the more important it is to increase the sample size.
You're an auditor explaining the tasks you completed on a recent audit of Igloos Unlimited.
Here are the relevant facts:
- You noticed that the items being tested were the result of subjective judgements by the firm.
What factor affected the number of samples required, and did it necessitate less or more testing?
Answer:
- It was nature of the account or transaction - the more complex or subjective the item creation process, the, the more tests are required.
Explanation:
-
As potential for variation in the creation process increases, more testing is required to account for potential differences (either intentional or not).