Question

When deciding how large a sample size to use in auditing collections, what factors should you consider? What might lead you to increase or decrease the sample size?

Answer 1

Key factors which determine sample size and increase/decrease in sample size are:

- The nature of controls-manual controls will typically imply larger sample size. System based controls will typically require a lower sample size

- Frequency of transaction- For transactions which re more frequent, sample size will typically be larger. For low frequency transactions, sample size will be lower

- Control environment: In case of a robust control environment, the auditor may choose to select a lower sample size

-Overall population size: The overall sample size will depend on the population size as well. A very big population size may mean a higher sample size as well

Please comment for further discussion or clarifications