Audit Tips

September 29, 2021

5 Main Steps That Audit Teams Should Follow When They Use Sampling

Audit Tips

Sampling is the selection of a subset of the totality of elements that could be analyzed, called the population. It can be generalizable, i.e., drawn randomly in order to efficiently extrapolate the results to the population, or purposeful, i.e., based on a rational argument linked to the audit objective, in order to provide insights on the nature or cause of a problem. Using sampling can be a useful evidence collection strategy when conducting a performance audit.

Here are some tips that you should consider when deciding whether and how to use sampling in your next performance audit.

	Investigate and analyze the population of interest The first step in any performance audit sampling process should be a comprehensive review of the available administrative data (i.e., data collected by government institutions or agencies for public administration purposes) relevant to the audit topic. This applies to both generalizable and purposeful sampling. Reviewing the available data will allow auditors to identify populations to assess whether these populations are sufficiently homogeneous, and to determine whether the data is of sufficient quality to make sampling possible. Completing this review will help auditors take decisions about sampling objectives and appropriate sampling methodology. The review in itself may also provide useful evidence that might serve to support audit observations or as contextual information in the audit report.
	Select the right sampling approach A very important decision auditors must take once they have determined that they can and will be using sampling to gather audit evidence is whether they should use a generalizable sampling approach or a purposeful sampling approach. This decision is governed by the need to determine which approach best enables the efficient collection of sufficient and appropriate evidence to meet the testing objective. Selecting the right sampling approach will depend on: the nature and complexity of the questions auditors need to answer, how generalizable to the entire population the sample needs to be, the characteristics of the population being studied, and the resources available.
	Prepare a sampling plan Once a sampling approach has been selected, the next step is preparing a detailed sampling plan. The key elements that should be in the sampling plan, are: Population analysis Objectives of sampling Level of accuracy desired (for generalizable sampling) Establishing expected error level (for generalizable sampling) Defining reportable findings Sample size calculation Description of sampling method
	Execute the plan During the examination phase of a performance audit, the auditors conduct the procedures they have described in their audit plans, including sampling procedures, and document the results of these procedures. However, in some cases, it may be impossible to implement the sampling procedures exactly as planned and then the auditors need to modify the plan to adjust to the circumstances.
	Report the results There are a few general guidelines that auditors should apply when reporting audit findings that were obtained through generalizable or purposeful sampling. These guidelines are: Include a clear and succinct description of the sampling strategy. The results from a generalizable sample are relatively easy to report. The intent of generalizable sampling is rather narrow: extrapolating sample results to the entire population. This does not mean that auditors should not be careful when reporting the result of a generalizable sample. Take great care when reporting the results from a purposeful sample than from a generalizable sample. It must provide an explanation of the results, including what can be inferred from the results given how the sample was selected and what other information corroborates this inference.