Financial sampling allows auditors to approximate the rate of error within financial statements. For accounting purposes, auditors may examine an institution, individual or group of records without analyzing every document in detail. Choosing a sampling of records allows them to look for patterns demonstrating a lack of compliance with regulations. If evidence of errors or illegal actions is obtained during the sampling, the auditor may gain enough data to use as legal evidence against the owner of the data. Alternatively, the results may indicate a need for further research.

Sampling Methods

Auditors may use either statistical or non-statistical sampling. Statistical sampling involves using mathematical methods to select appropriate samples. This method reduces the risk of introducing human error in the audit by reducing bias. Non-statistical sampling relies on the financial professional's knowledge and judgement to choose appropriate samples. The auditor may select particular categories of financial statements for comparison or individual samples from multiple categories.

Preventing Sampling Problems

Auditors must carefully choose an appropriate sampling method before beginning the audit. Using the wrong sampling method may create potential problems. If the pool of data is relatively large, choosing a small sample size will likely result in an inaccurate reading. Sampling selection bias may occur if the audit favors a particular outcome or if certain data is more heavily represented. For example, a government audit of small business taxpayer records may be more likely to return information indicating the need for higher tax payments. To prevent possible sampling risk and bias, experienced financial professionals familiar with preventing these problems should carefully consider the methodology chosen for the audit before starting it.

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