For the purposes of the Australian Auditing Standards, the following terms have the meanings attributed below:
Audit sampling (sampling) means the application of audit procedures to less than 100% of items within a population of audit relevance such that all sampling units have a chance of selection in order to provide the auditor with a reasonable basis on which to draw conclusions about the entire population.
Population means the entire set of data from which a sample is selected and about which the auditor wishes to draw conclusions.
Sampling risk means the risk that the auditor’s conclusion based on a sample may be different from the conclusion if the entire population were subjected to the same audit procedure. Sampling risk can lead to two types of erroneous conclusions:
- In the case of a test of controls, that controls are more effective than they actually are, or in the case of a test of details, that a material misstatement does not exist when in fact it does. The auditor is primarily concerned with this type of erroneous conclusion because it affects audit effectiveness and is more likely to lead to an inappropriate audit opinion.
- In the case of a test of controls, that controls are less effective than they actually are, or in the case of a test of details, that a material misstatement exists when in fact it does not. This type of erroneous conclusion affects audit efficiency as it would usually lead to additional work to establish that initial conclusions were incorrect.
Anomaly means a misstatement or deviation that is demonstrably not representative of misstatements or deviations in a population.
Statistical sampling means an approach to sampling that has the following characteristics:
A sampling approach that does not have characteristics (i) and (ii) is considered non-statistical sampling.
- Random selection of the sample items; and
- The use of probability theory to evaluate sample results, including measurement of sampling risk.
Stratification means the process of dividing a population into sub-populations, each of which is a group of sampling units which have similar characteristics (often monetary value).
Tolerable misstatement means a monetary amount set by the auditor in respect of which the auditor seeks to obtain an appropriate level of assurance that the monetary amount set by the auditor is not exceeded by the actual misstatement in the population. (Ref:
Tolerable rate of deviation means a rate of deviation from prescribed internal control procedures set by the auditor in respect of which the auditor seeks to obtain an appropriate level of assurance that the rate of deviation set by the auditor is not exceeded by the actual rate of deviation in the population.