Why do auditors find it necessary to use sampling and what are the associated risks?

It is necessary for auditors to use sampling because it is often a difficult task to fully audit all items. By conducting audit sampling the auditor is able to evaluate key characteristics of the entire account balance.

There are two inherent risks associated with audit sampling – (i) control risk, and (ii) test of details risk. There is also a sampling risk and a non-sampling risk associated with audit sampling. Sampling risk often implies that the sample used is not an adequate representation of the population. Non-sampling risks suggest that a portion of audit risk that is not due to examining only a portion of the data, this may include human error, inappropriate application of audit procedures, or misinterpretation of the results of a sample.

If control risk is assessed too low based on the sample, this may support the conclusion that the assessed level of control risk is accurate throughout. If control risk is assessed too high, this will have the adverse affect on assessing risk; where the sample does not support the planned assessed level. Other associated risks include the risk of incorrect acceptance, where the sample supports the conclusion showing the account is not misstated when it actually is.