- This topic has 4 replies, 3 voices, and was last updated 11 years ago by
.
-
Posts
-
Dear sir
Could you please explain, with an example if possible what it means
‘evidence is persuasive not conclusive’?You will know that almost all auditing relies on sampling. So, although there might be 10,000 purchase transactions, the auditor will probably select only about 30 to check that these have been properly authorised.
If all have been authorised then the auditor will conclude that the internal control for this is OK. That is persuasive evidence only, not conclusive, because it is possible that the 9970 transactions were not properly authorised. You can only obtain conclusive evidence by examining everything.
Proper random sampling is done by consecutively numbering each item in the population then generating random numbers which determine which items will form the sample. There is no human intervention in the choice of items in the sample.
Haphazard sampling would be like opening a file of invoices (say) at ‘random’ places and choosing the invoices there. This might approximate to random sampling but there is always the danger of bias ie favouring some items in the population. For example, the file might tend to open at:
1 Where invoices were physically larger
2 Where invoices were thicker.This can easily slide into very serious bias if the auditor said ‘I will always choose invoices from ABC LTd and XYZ ltd because they are simple to check’!
Random sampling means that each item in the population has an equal chance of selection for the sample.
- You must be logged in to reply to this topic.