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the effect on sample size of factors identified below will be similar regardless of whether statistical or non-
statistical approach is chosen.
Non-Sampling risk arises from factors that cause the auditor to reach an erroneous conclusion fro any reason
not related to the size of the sample. For example, most audit evidence is persuasive rather than conclusive,
the auditor might use inappropriate procedures, or the auditor might misinterpret evidence and fail to recognize
an error.
Design of the Sample
When designing an audit sample, the auditor should consider the objectives of the test and the attributes of the
population from which the sample will be drawn. The auditor first considers specific objectives to be achieved
and the combination of audit procedures which is likely to best achieve those objectives. Consideration of the
nature of the audit evidence sought and possible error conditions or other characteristics relating to that
evidence will assist the auditor inn defining what constitutes an error and what population to use for sampling.
The auditor considers what conditions constitute an error by reference to the objectives of the test. A clear
understanding of what constitutes an error is important to ensure that all, and only those conditions that
relevant to the test objectives are included in the projection of errors.
When performing tests of control, the auditor generally makes a preliminary assessment of the arte of error the
auditor expects to find in the population to be tested and the level of control risk. The assessment is based on
the auditor’s prior knowledge or the examination of a small number of items from the population. Similarly, for
substantive tests, the auditor generally makes a preliminary assessment of the amount of error in the
population. These preliminary assessment are useful fro designing an audit sample and in determining sample
size. For example, if the expected rate of error id unacceptable high, test of control will normally not be
performed. However, when performing substantive procedures if the expected amount of error is high, 100%
examination or the use or a large sample size may be appropriate.
Population
It is important for the auditor to ensure that the population is;
▪ Appropriate to the objective of the sampling procedure, which will include consideration of the direction
of testing. For example, if the auditor’s objec tive is to test for overstatement of accounts payable, the
population could be defined as the accounts payable listing. On the other hand, when testing for
understatement of accounts payable the population is the subsequent disbursement, unpaid invoices,
s upplier’s statement, unmatched receiving reports or other populations that provide audit evidence of
understatement of accounts payable.