Question

As you can see in the Calabro Wireless example in chapter 8, it only took 2 deviations in the testing of control procedure 1 for the auditor to conclude that the testing did not support reliance on this control. The sample size for testing control 1 was 78. That’s a large sample and no doubt, took a lot of auditor hours. As you can see, sampling is very conservative. Do you agree with this? Does the auditor time (and time is money) justify such conservatism? Please write an articulate, thoughtful response to the question above. This response should be 200-250 words in length.

Answer 1

1. Generally speaking sampling in auditing is allowed by the professional bodies in either of the two ways i.e Judgemental or Statistical.

2. As every transaction cannot be verified and checked generally auditors prefer to take out the sample and verify confirming all the other transactions are in order say for example in a set of debtors or a set of creditors, a sample is taken a verified whether it's taken properly into account or not.

3. In Judgemental sampling, the auditors select the items to be verified and taken into account only through his subject knowledge and that particular product is audited.

4. In Statistical sampling, the items are selected randomly and then get endorsed by the accounting bodies or auditors. Chances of getting selected are higher for the samples.

5. Sampling enables the auditors to ease their work in terms of firm's auditing.

6. This makes the auditors get sufficient evidence about the auditor's opinion.

7. This conservatism concept of sampling enables the auditor to accurately draw the confidential financial statements.

8. It's useful as a tool for investigation at times of audit.

9. It's useful for auditor to en sure that they are done with the audit based on particular auditing standards

10. So, concluding in terms of large sample and no doubt and taking a lot of auditor time, Sampling plays a key role in auditor's time saving and evaluates his proper audit.