Sampling
Kyle Ashcraft, CPA · 2019 CPA Exam Scores · 95 FAR · 98 BEC · 91 REG · 90 AUD
Sampling is a cornerstone audit methodology, and a heavily tested topic on the AUD section of the CPA exam.
What is audit sampling?
Sampling is the practice of reviewing a subset of transactions or data points from a much larger set to draw general conclusions about the entire population. It's essential because auditing every single transaction is often impractical or cost-prohibitive.
What sampling methods should you know?
- Random sampling — every item has an equal chance of being chosen
- Haphazard sampling — a non-random method where items are chosen arbitrarily
- Stratified sampling — the population is divided into subgroups, and samples are taken from each
- Block sampling — consecutive groups of items are tested
Example: You're auditing a large retail store with 20,000 transactions per month. Instead of reviewing all 20,000 (impractical), you use random sampling and select 400 transactions to inspect for irregularities. If 2 of those 400 transactions contain errors, that's an error rate of 2 ÷ 400 = 0.5%. You'd project that roughly 0.5% of all 20,000 transactions could be erroneous, which then informs how you scope the rest of the audit.
Sampling lets an auditor form a conclusion about an entire population without testing every item in it. The method you choose — random, haphazard, stratified, or block — shapes how representative your sample is, and the error rate you find in the sample gets projected onto the whole population.
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Kyle Ashcraft, CPA scored 90 or above on every section of the CPA exam in 2019, including a 90 on AUD. He is the founder and sole instructor of Maxwell CPA Review, a complete CPA review course covering all six sections, where he creates every lecture, textbook and study outline himself.