Statistical Sampling vs Nonstatistical Sampling: Understanding the Differences

When conducting an audit, sampling is often employed as a means to evaluate a characteristic of a population. There are two main approaches to sampling: statistical sampling and nonstatistical sampling. Understanding the differences between these two methods is crucial for auditors to make informed decisions regarding sample size determination, selection process, and measuring sampling risk. This article aims to provide a comprehensive overview of statistical sampling and nonstatistical sampling, highlighting their contrasting features and implications within the auditing context.

Statistical Sampling

Statistical sampling is a method that relies on probability theory and statistical techniques to select a representative sample from a population. It involves the following key characteristics:

Equal Chance of Selection: In statistical sampling, each sampling unit within the population has an equal chance of being selected. This ensures that the sample is representative of the entire population, allowing for reliable inferences to be made.
Reliance on Probability Theory: Statistical sampling is grounded in probability theory, which enables auditors to quantify the likelihood of drawing certain conclusions based on the sample results. This allows for a more rigorous and objective analysis of the data.
Use of Statistical Techniques: Statistical sampling involves the use of statistical techniques to determine the appropriate sample size and selection process. These techniques take into account factors such as the desired level of precision, allowable risk of incorrect conclusions, and the variability within the population.
Quantifiable Measure of Sampling Risk: By using statistical methods, auditors can obtain a quantifiable measure of sampling risk. This measure provides an estimate of the likelihood that the sample results may differ from the results that would be obtained if the entire population were examined.

Nonstatistical Sampling

Nonstatistical sampling, in contrast to statistical sampling, relies on the auditor’s judgment rather than probability theory. It involves the following key characteristics:

Unequal Chance of Selection: Nonstatistical sampling does not ensure an equal chance of selection for each sampling unit. The auditor exercises judgment in selecting the items to be included in the sample, often based on their knowledge of the population and the specific audit objectives.
Reliance on Auditor’s Judgment: In nonstatistical sampling, auditors rely on their professional judgment and experience to determine the sample size, selection process, and evaluation of the sample results. This approach allows for flexibility but may introduce subjectivity into the sampling process.
Absence of Statistical Techniques: Nonstatistical sampling does not involve the use of statistical techniques for determining sample size or selection. Instead, auditors use their judgment to determine the sample size based on factors such as materiality, risk assessment, and the nature of the population.
Non-quantifiable Sampling Risk: Unlike statistical sampling, nonstatistical sampling does not provide a quantifiable measure of sampling risk. The assessment of sampling risk is based on the auditor’s judgment and qualitative considerations rather than statistical calculations.

It is important to note that both statistical sampling and nonstatistical sampling can be appropriate in certain audit situations. The choice between the two methods depends on factors such as the nature of the audit objective, the availability of relevant data, the level of precision required, and the auditor’s professional judgment.

By understanding the differences between statistical sampling and nonstatistical sampling, auditors can make informed decisions regarding the sampling approach that best suits the specific audit engagement. Consideration of these differences allows auditors to effectively plan, execute, and evaluate their sampling procedures, ultimately enhancing the overall quality and reliability of the audit process.

Sources

ACCA Global. “Audit Sampling.” Available at: https://www.accaglobal.com/gb/en/student/exam-support-resources/fundamentals-exams-study-resources/f8/technical-articles/audit-sampling.html
Public Company Accounting Oversight Board (PCAOB). “AS 2315: Audit Sampling.” Available at: https://pcaobus.org/oversight/standards/auditing-standards/details/AS2315

FAQs

What is statistical sampling?

Statistical sampling is an audit approach that relies on probability theory and statistical techniques to select a representative sample from a population. It ensures each sampling unit has an equal chance of selection and provides a quantifiable measure of sampling risk.

What is nonstatistical sampling?

Nonstatistical sampling is an audit approach that relies on the auditor’s judgment rather than probability theory. It does not ensure an equal chance of selection for each sampling unit and does not provide a quantifiable measure of sampling risk.

How does statistical sampling differ from nonstatistical sampling?

The key differences between statistical sampling and nonstatistical sampling are as follows:

Statistical sampling relies on probability theory, while nonstatistical sampling relies on the auditor’s judgment.
Statistical sampling ensures equal chance of selection for each sampling unit, while nonstatistical sampling does not.
Statistical sampling involves the use of statistical techniques for sample size determination, while nonstatistical sampling does not.
Statistical sampling provides a quantifiable measure of sampling risk, while nonstatistical sampling does not.

When should statistical sampling be used?

Statistical sampling is typically used when a high level of precision and objectivity is required. It is suitable for situations where a quantifiable measure of sampling risk is needed, such as in financial statement audits or compliance audits.

When should nonstatistical sampling be used?

Nonstatistical sampling is often used in situations where statistical techniques are not practical or necessary, such as when auditing small populations, conducting risk assessments, or performing preliminary analytical procedures. It allows auditors to exercise judgment and flexibility in sample selection.

What factors should auditors consider when choosing between statistical and nonstatistical sampling?

Auditors should consider factors such as the nature of the audit objective, the availability of relevant data, the level of precision required, and their professional judgment. These factors will help determine whether statistical or nonstatistical sampling is more appropriate for a particular audit engagement.

Can both statistical and nonstatistical sampling be used together in an audit?

Yes, auditors can use a combination of statistical and nonstatistical sampling techniques within the same audit engagement. The choice of sampling method may vary depending on the specific audit objectives and the characteristics of the population being sampled.

How can the use of statistical or nonstatistical sampling enhance the audit process?

The use of statistical or nonstatistical sampling, when applied appropriately, can help auditors obtain sufficient and appropriate audit evidence. Statistical sampling provides a more objective and rigorous approach, while nonstatistical sampling allows for flexibility and professional judgment. Both methods contribute to the overall quality and reliability of the audit process when used in the right circumstances.