Why do auditors find it necessary to use sampling? What are the risks associated with using sampling? How will these risks affect the audit conclusion?

Answer:

Auditors find it necessary to use sampling in an audit, due to the amount of time and efficiency of this method. Audit sampling is a method to of auditing less than 100% of articles in an account balance or transaction class, with the intent of finding misstatements in an entire class or account balance (Boynton and Johnson, 2006). One of the risks associated with using sampling is that a sample of the larger population may not represent the entire population (Boynton and Johnson, 2006). This is called the sampling Risk. This is a risk to the audit conclusion because the audit could conclude something different about internal controls or details of account balance or transaction class (Boynton and Johnson, 2006). In addition, if they had evaluated the entire population for misstatements this might have brought a different audit conclusion. Some uncertainty is acceptable in audit sampling. There are also non-sampling risks that must be taken into account when using audit sampling. This correlates to the portion of audit risk that is because the entire population was not examined (Boynton and Johnson, 2006). These can be human errors, or relying on misstated information for the basis of an audit conclusion. Other risks of not interpreted the audit sampling appropriately to audit objective. Some risks cannot me arithmetically calculated, such as the case with non-sampling risks.

Boynton, W. C., & Johnson, R. N. (2006). Modern auditing: Assurance services and the integrity of financial reporting. (8th ed.). Hoboken, NJ: Wiley.