Sampling And Methods Of Sampling

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This memo would be an overview of sampling, starting with the definition of what sampling is, when and how it is used ranging to the discussion of different types of sampling and the risks related to them. The memo will also discuss the steps involved with sampling and the role of sampling in auditing including the attributes sampling and the variables sampling.
Sampling is to draw a conclusion efficiently about a population of interest by testing the acquired assurance on a subset of that population, which is called the sample, at less cost of time and money than those of testing the whole population. However, the trade-off between efficiency and effectiveness always exists. In the other words, sampling would be used when the gains of efficiency exceed the loss of effectiveness.
As sampling only test a small group of sample among the population, which can cause the loss of the effectiveness, the sampling risk always exists. The sampling risk is defined as the likelihood of the difference happened between the conclusion drew from testing the sample and the one from testing the whole population.
For example, a company has a snack with three tastes, A, B and C, all targeting the market of teenagers. The company did sampling when deciding which product to focus more. Giving 10 points to each participant and asking them to allocate the points to the three tastes after trying, the researchers would calculate the total credits each taste got.
The conclusion of testing 100 participants from the population shows A got more credits, however, the true results is that C is the best-seller. The difference is called the sampling error, which occurs when a sample is a non-representative group of the population. Therefore, in order to contro...

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...les sampling, the population is all components or transactions in the account balance or the class of transactions.
Auditors are using sampling to increase the efficiency while maintaining the appropriate level of effectiveness, however sampling risks may cause the different and unexpected results. From the module, we can see that how closely the results are related to each method and stages used in the sampling, and this is the reason why auditors should know how to sample, what to do to control the risks.
In conclusion, this memo has given a good guide and explanation on what sampling is, when and how auditing is used both regularly and in auditing aspect. It also indicated the risks embedded in sampling and the methods to control those risks. Specific plans used in this process and how auditors use them in a client’s audit are detailed demonstrated step by step.
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