Page 140 - CA Inter Audit PARAM

CA Ravi Taori
Explain the sampling method which involves selection of a block(s) of contiguous items from within the
population. Also give example.
OR
This method is considered appropriate provided the population to be sampled consists of reasonably
similar units and fall within a reasonable range i.e. it is suitable for a homogeneous population having
a similar range. Explain about that method.
Answer ➢ Methods of Sampling:
There are many methods of selecting samples. The principal methods are as follows –

• Random Sampling:
Random selection ensures that all items in the population or within each stratum have a
known chance of selection. It may involve use of random number tables. Random sampling
includes two very popular methods which are discussed below–
• Simple random sampling: Under this method each unit of the whole population e.g.
purchase or sales invoice has an equal chance of being selected. The mechanics of
selection of items may be by choosing numbers from table of random numbers by
computers or picking up numbers randomly from a drum. It is considered that random
number tables are simple and easy to use and also provide assurance that the bias does
not affect the selection. This method is considered appropriate provided the
population to be sampled consists of reasonably similar units and fall within a
reasonable range. For example the population can be considered homogeneous, if say,
trade receivables balances fall within the range of Rs 5,000 to Rs 25,000 and not in the
range between Rs 25 to Rs 2,50,000

• Stratified Sampling: This method involves dividing the whole population to be tested
in a few separate groups called strata and taking a sample from each of them. Each
stratum is treated as if it was a separate population and if proportionate of items are
selected from each of these stratum. The number of groups into which the whole
population has to be divided is determined on the basis of auditor judgment. For
example in the above case, trade receivables balances may be divided into four groups
as follows –
o balances in excess of Rs 1,00,000;
o balances in the range of Rs 75,000 to Rs 1,00,000;
o balances in the range of Rs 25,000 to Rs 75,000; and
o balances below Rs 25,000.

• Systematic selection, in which the number of sampling units in the population is divided by
the sample size to give a sampling interval, for example 50, and having determined a starting
point within the first 50, each 50th sampling unit thereafter is selected. Although the starting
point may be determined haphazardly, the sample is more likely to be truly random if it is
determined by use of a computerised random number generator or random number tables.
When using systematic selection, the auditor would need to determine that sampling units
within the population are not structured in such a way that the sampling interval corresponds
with a particular pattern in the population.

• Monetary Unit Sampling is a type of value-weighted selection in which sample size, selection
and evaluation results in a conclusion in monetary amounts.

• Haphazard selection, in which the auditor selects the sample without following a structured
technique. Although no structured technique is used, the auditor would nonetheless avoid
any conscious bias or predictability (for example, avoiding difficult to locate items, or always
choosing or avoiding the first or last entries on a page) and thus attempt to ensure that all
items in the population have a chance of selection. Haphazard selection is not appropriate
when using statistical sampling.

• Block selection involves selection of a block(s) of contiguous items from within the
population. Block selection cannot ordinarily be used in audit sampling because most
populations are structured such that items in a sequence can be expected to have similar
characteristics to each other, but different characteristics from items elsewhere in the

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