What is Audit Sampling?
Audit sampling is the process of selecting and testing a representative subset of items from a larger population so the auditor can form a conclusion about the entire population without examining every transaction. It is governed by International Standard on Auditing (ISA) 530.
How It Works
- Define the population (for example, all sales invoices issued in the year).
- Choose a sampling method: statistical (random, systematic, monetary unit sampling) or non-statistical (judgemental).
- Determine the sample size based on materiality, risk of misstatement, and control effectiveness.
- Test the selected items and project the results to the full population, evaluating any errors found.
Saudi Context
Saudi external auditors, licensed by SOCPA, apply ISA 530 in every statutory audit. Audit sampling is especially important when testing VAT, zakat, and payroll cycles for Saudi companies, where ZATCA inspections may later test the same populations using their own samples.
Example
An auditor of a Riyadh wholesaler picks 50 invoices using monetary unit sampling out of 5,000 issued. After testing, 2 invoices show pricing errors worth SAR 8,000. The auditor projects this to the population and assesses whether the result exceeds materiality.