Factors that Affect Audit Sample Size

Lesson

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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.

Question

Jenny LLC, a recent audit client, is trying to understand the bill for a recent audit.

The only relevant information you've discovered is as follows:

You noticed that the firm's control systems were extensively used.

What factor affected the number of samples required, and did it necessitate less or more testing?

Answer

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👉 Answer:

It was control risk - the better the use and design of controls, the fewer tests are required.

👩‍🎓 This is how we solve it:

Excellent controls should be good at catching unwanted variations. Poor controls allow unwanted variations to pass without warning.

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