Page 139 - CA Inter Audit PARAM

CA Ravi Taori
CA X is not sure about the kind of Sampling method to be used for audit of a company. Advise him the
method of sampling to be used. Also explain briefly the advantages of the Sampling to be used by him in
auditing.
OR
ABC Ltd is a Large Company with huge purchase and sales transactions. Which sampling approach is
recommended in such a company? Explain giving features of such sampling approach along with example.
Answer

CA. X should obtain the knowledge before using the sampling methods. The principal methods are
as follows:
(1) Random selection.
(2) Systematic selection.
(3) Monetary Unit sampling.
(4) Haphazard selection.
(5) Block selection.
➢ The advantages of statistical sampling may be summarized as follows –
• It provides a means for deriving a “calculated risk” and corresponding precision (sampling
error) i.e. the probable difference in result due to the use of a sample in lieu of examining all
the records in the group (universe), using the same audit procedures.
• The method provides a means of estimating the minimum sample size associated with a
specified risk and precision.
• The amount of testing (sample size) does not increase in proportion to the increase in the
size of the area (universe) tested.
• The sample selection is more objective and thereby more defensible.
• It may provide a better description of a large mass of data than a complete examination of
all the data, since non-sampling errors such as processing and clerical mistakes are not as
large.
Author’s Note: In ca x question you will also have to explain statistical and non-statistical sampling as given
in 530.07

Methods of Sampling- Master Answer Old Course -- (P16M/M16E/N16R/M17E/N17R/N17E/
QNO Bhaskar CNO- SA530.180 SM17/N19R/SM20/M20R/SM21/N22R/M23R)
530.11
New Course -- (SM25)
Random selection ensures that all items in the population or within each stratum have a known chance of
selection. Explain.
OR
What is the meaning of Sampling? Also discuss the methods of Sampling. Explain in the light of SA 530 Audit
Sampling.
OR
The extent of the checking to be undertaken is primarily a matter of judgment of the auditor.
It is in the interest of the auditor that if he decides to form his opinion on the basis of a part checking, he
should adopt standards and techniques which are widely followed Explain. Discuss the methods of Sampling
in the light of SA 530.
OR
Write a short note on Random sampling.
OR
Stratified sampling
OR
Haphazard sampling
OR

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