Sampling risk and non-sampling risk.
Sampling risk. Conception.
The conclusions drawn from the sample may differ from the risk of conclusions reached if the same audit procedures are applied to the entire population.
Influencing factors. Sampling risk is caused by sampling and is related to sample size and sampling methodology;
The sample size is inversely variable with the sampling risk.
Control the risk of sampling in the test: risk of over-reliance (effectiveness), risk of under-reliance (efficiency).
Sampling risk in detail testing: risk of false rejection (efficiency), risk of false acceptance (effect).
Control of sampling risk.
Whether it's control testing or detail testing, sampling risk can be reduced by expanding the sample size;
If all items in the population are inspected, there is no risk of sampling.
Non-sampling risk.
Definition. Non-sampling risk refers to the risk of incorrect conclusions due to any reason unrelated to sampling risk.
Causes. Non-sampling risks may arise when both control testing and substantive procedures are implemented. Non-sampled risk is caused by human factors and is difficult to quantify:
The population chosen is not suitable for the test target, and the presence and completeness of the population are different.
Errors are not properly defined, including bias and misstatement.
Audit procedures that were not suitable for the specific objective were selected and the confirmation did not achieve the objective of testing the unrecorded receivables.
Failure to properly evaluate audit findings, misreading of evidence or misjudging materiality.
Control of non-sampling risk.
It can be mitigated or prevented, i.e., non-sampling risks can be reduced to an acceptable level of reasonable assurance through careful design of audit procedures, adoption of appropriate quality management policies and procedures, appropriate guidance, supervision and review of audit work, and appropriate improvement of practice.