Population

The population is the set of data items about which the auditor wishes to form a conclusion. For example, if the auditor wishes to draw a conclusion about the validity of purchase transactions for a nine month period, then the population may be identified as all the purchase transactions that occurred during that nine month period. The auditor can only draw a conclusion about the population from which the sample is drawn. For example, the auditor cannot draw a conclusion about all purchase transactions during a year if the population from which the sample was drawn was only a nine month period.

Once the audit objective and the nature of an exception have been defined, it is possible to be able to properly identify the population. If the population is not properly identified, then either (i) items may be included in the population, and the sample, that should not be included or (ii) items may be excluded from the population, and the sample, that should not be excluded. Either way, the rate/value of exceptions in the population is likely to be either over- or underestimated. The direction of the misestimation depends on whether the sample chosen includes invalid items (or excludes valid items) and the extent to which these items are (or are not) represented in the sample.

The population size may be referred to as either N, being the number of items (or data units) in the population, or $N, being the value of the items in the population.

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