Page 114 - CA Final Audit Titanium Full Book. (With Cover Pages)

CA Ravi Taori
Advantages of Statistical Sampling:
(Shortcut- Large Powerful & MOR)
• L - Better description of large mass of data than complete examination of all data
• P - Sample size does not increase in Proportion to increase in size of Population.
• M - Means to estimate Minimum Sample Size with specified risk & precision.
• O - More Objective & Defensible
• R - Calculated Risk

(CNO-SA530.120) Sample Selection Methods
Random Sampling
Random Sampling: All items in population or strata have equal chance of selection. Then we may be use
random number table, random between excel function or anything like this to select sample.
Simple Random:
• It is suitable for Homogeneous population.
• No division of population
• Every Unit has unknown/equal chance of selection, random number table, picking numbers from drum etc.
Stratified Sampling:
• It is Suitable for Heterogenous population.
• Divide Population in group called Strata.
Each stratum is treated as separate population & random sampling is done. Different percentage selection can
be done for different strata (Recall Trade Receivable Example)
Interval based/ systematic Sampling:
• Constant interval is used for selection.
• First unit is selected Randomly within first interval.
• Then Constant interval is used to select other units in sample.
• Interval can be in number or monetary value
Cluster sampling:
Step 1: Divide population into group called Cluster E.g., Cluster of 10, 20 or 30 etc.
Step 2: Randomly select clusters from all the clusters.
Step 3: Either select ALL items in cluster or again apply random sampling to select units from clusters.
While applying random sampling within cluster use
• Simple random sampling/ unrestricted sampling
• Stratified Random sampling.
This method is cost effective but are less effective as compared to simple random sampling
Monetary Unit Sampling/ Value weighted Selection
Monetary amounts are used for
• Sample size
• Selection Method
Evaluation of Results
Haphazard Selection:
• No Structured Technique/Pattern
• Use of personal Judgement
• Avoid bias or Predictability.
• All items should have chance of selection.
• Not appropriate when using Statistical Techniques
Block Selection:
• Not selecting single item in selection, but selecting group of consecutive items
• Starting point may be as per auditor preference.
• Sometimes, it may be suitable but majority of the time it won’t be, as items of same characteristics will get
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