Audit Sampling, Audit Risk and Materiality

If you download our notes you can click on the chapter in the contents list at the beginning and/or search for key words. So you will find in the audit risk model (s.3. of Chapter 9) that audit sampling is relevant to detection risk – which has two components: sampling risk and non-sampling risk.

As described – IR and CR are assessed – only DR is controlled by the auditor – so this is the determinant of audit risk. For DR to be reduced to an acceptably low level, the auditor must INCREASE substantive procedures (e.g. larger samples). To do more work means lowering materiality as a monetary amount.