Sampling risk
Sampling risk is the risk that a sample does not reflect the true
characteristics of the population. (In non-statistical sampling,
the auditor is simply aware of this risk. In statistical sampling,
however, the auditor has to nominate the level of sampling risk
that he or she is prepared to accept.) The sample may not be
representative of the population as a result of one of two types of
sampling error occurring:
- the true characteristics of the population are not represented
in a sample when a significant exception is not present.
(This is sometimes referred to by auditors as a Type I error; the probability of the occurrence of such an error is called alpha risk.)
- the true characteristics of the population are not represented
in a sample when a significant exception is present.
(This is sometimes referred to by auditors as a Type II error; the probability of the occurrence of such an error is called beta risk.)
Sampling risk (both alpha and beta risk) is
controlled through the size of the sample - the greater the sample
size selected, the lower the level of sampling risk, and vice
versa
Audit testing procedures, index
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