29 September 2021

5 Main Steps That Audit Teams Should Follow When They Use Sampling

Choosing an audit topic is a crucial moment in the performance audit process. Ultimately, audit topic selection reflects on the credibility and the relevance of the audit organization and on the usefulness of its audit reports. A good way of selecting the right audit topic is to aim to add value for the recipient of the audit report. A value-added audit is more likely to be well received and to lead to concrete improvements. But what does “value-added” really mean?

There are several considerations involved in defining value-added:

	Investigate and analyze the population of interest The first step in any performance audit sampling process should be a comprehensive review of the available administrative data (i.e., data collected by government institutions or agencies for public administration purposes) relevant to the audit topic. This applies to both generalizable and purposeful sampling. Reviewing the available data will allow auditors to identify populations to assess whether these populations are sufficiently homogeneous, and to determine whether the data is of sufficient quality to make sampling possible. Completing this review will help auditors take decisions about sampling objectives and appropriate sampling methodology. The review in itself may also provide useful evidence that might serve to support audit observations or as contextual information in the audit report.
	Select the right sampling approach A very important decision auditors must take once they have determined that they can and will be using sampling to gather audit evidence is whether they should use a generalizable sampling approach or a purposeful sampling approach. This decision is governed by the need to determine which approach best enables the efficient collection of sufficient and appropriate evidence to meet the testing objective. Selecting the right sampling approach will depend on: the nature and complexity of the questions auditors need to answer, how generalizable to the entire population the sample needs to be, the characteristics of the population being studied, and the resources available.
	Prepare a sampling plan Once a sampling approach has been selected, the next step is preparing a detailed sampling plan. The key elements that should be in the sampling plan, are: Population analysis Objectives of sampling Level of accuracy desired (for generalizable sampling) Establishing expected error level (for generalizable sampling) Defining reportable findings Sample size calculation Description of sampling method
	Execute the plan During the examination phase of a performance audit, the auditors conduct the procedures they have described in their audit plans, including sampling procedures, and document the results of these procedures. However, in some cases, it may be impossible to implement the sampling procedures exactly as planned and then the auditors need to modify the plan to adjust to the circumstances.
	Report the results There are a few general guidelines that auditors should apply when reporting audit findings that were obtained through generalizable or purposeful sampling. These guidelines are: Include a clear and succinct description of the sampling strategy. The results from a generalizable sample are relatively easy to report. The intent of generalizable sampling is rather narrow: extrapolating sample results to the entire population. This does not mean that auditors should not be careful when reporting the result of a generalizable sample. Take great care when reporting the results from a purposeful sample than from a generalizable sample. It must provide an explanation of the results, including what can be inferred from the results given how the sample was selected and what other information corroborates this inference.