Auditing & Assurance › Audit Sampling

What factors affect sample size?

Intermediate

Answer

For substantive tests, sample size increases with higher assessed risk of material misstatement, higher required assurance, and larger expected misstatement, and decreases with a larger tolerable misstatement and reliance on other procedures. For tests of controls, size increases with a lower tolerable deviation rate, higher expected deviation rate, and higher required confidence. Population size has little effect for large populations.
Substantive: higher risk / lower tolerable error -> larger sample.
Controls: lower tolerable deviation / higher confidence -> larger sample.
Real-world example Because receivables are high risk with a low tolerable misstatement, the auditor selects a larger confirmation sample.

Common follow-ups: Does population size drive sample size? | How does tolerable error affect size?