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Audit sampling involves applying an audit procedure to less than 100 percent of the population for the purpose of evaluating some characteristic of the population. The fact that an audit involves sampling is noted in the scope paragraph of the auditor’s report, which contains the phrase “An audit includes examining, on a test basis.” When an auditor uses sampling, an element of uncertainty enters into the auditor’s conclusions.

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1. Explain the auditor’s justification for accepting the uncertainties that are inherent in the sampling process.

2. Discuss the uncertainties that collectively embody the concept of audit risk.

3. Discuss the nature of sampling risk and nonsampling risk. Include the effect of sampling risk on tests of controls.

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