PURPOSE: The two approaches to audit sampling; statistical and nonstatistical have been examined in this study. The overall purpose of the study is to explore the current extent at which statistical and nonstatistical sampling approaches are utilized by independent auditors during auditing practices. Moreover, the study also seeks to achieve two additional purposes; the first is to find out whether auditors utilize different sampling techniques when auditing SME´s (Small and Medium-Sized Enterprise) and big companies and the second is to find out some common selection methods that are used by auditors for selecting statistical or nonstatistical audit samples during audit sampling practices.   METHOD: The population that has been investigated consists of professional auditors residing in Umeå-Sweden.Data for the study was collected by conducting semi-structured interviews and convenient sampling; a non-probability sampling technique was used for respondent’s selection. An interviewed guide was sent to respondents in advance with the objective of giving them the opportunity to have both mental and psychological preparations prior to each interview scheduled date. The semi-structured interview technique was adopted because it was a suitable approach to extract valuable information and in-depth explanations from auditors about the current extent of the use of statistical audit sampling and nonstatistical audit sampling during auditing practices. Ultimately, the selected respondents actively participated in which they thoroughly expressed their views and experiences about audit sampling, statistical audit sampling, and nonstatistical audit sampling.   RESULTS: Statistical audit sampling and nonstatistical audit sampling were found to be used most often by auditors when auditing the financial statements of big companies compare to SME´s where nonstatistical audit sampling is most often used. Therefore, both statistical and nonstatistical samplings are in dominant utilization by auditors in Sweden. Audit samples are selected through random selection method and systematic selection methods when using statistical audit sampling and for nonstatistical audit sampling; items are selected by the use of professional judgment. However, auditors in Sweden are more inclined with the use of random selection method for statistical audit sampling and their professional judgment for nonstatistical audit sampling. The main reasons for the auditors using both statistical audit sampling and nonstatistical audit sampling are to minimize risks and to guarantee high quality audit. The conclusion of the study was that auditors in Sweden use both statistical and nonstatistical audit sampling techniques when auditing big companies, use nonstatistical audit sampling when auditing SME´s, select samples using random selection method and systematic selection method for statistical audit sampling and for nonstatistical audit sampling, items are selected within the parameters of their professional judgment.

Audit evidence enables the auditor to express an opinion on the financial statements. To address the risk that the auditor may express an inappropriate opinion, the nature, timing and extent of audit procedures must be responsive to the assessed risks of material misstatement. The auditor must aggregate the levels of assurance obtained from different combinations of tests of controls, substantive analytical procedures and tests of details to respond to the assessed risks. These evidence planning decisions are complex and require professional judgement. Research has found that the extent of audit procedures is not linked to the assessed risks and that auditors may not know to aggregate evidence from different types of audit procedures. Research also supports the use of a structured audit methodology that includes decision models, to guide the application of professional judgement. This leads to the overall objective of this study: the development of an integrated audit evidence planning model to quantify the extent of audit evidence. The study employs a grounded theory model building approach, interpreting the relevant concepts and principles from the literature review into the development of the model. The integrated audit evidence planning model quantitatively relates the extent of audit evidence in a logical and structured manner with the risk assessment and three distinct overall levels of assurance needed to support the audit opinion. It uses the cumulative nature of audit evidence and the compensatory inter-relationship between tests of controls, substantive analytical procedures and tests of details to quantitatively aggregate the extent and levels of assurance from the different combinations of procedures to obtain reasonable assurance at the required overall level of assurance. The model provides a framework for influencing and guiding the exercise of professional judgement and is a practical and effective tool to benefit the users thereof when conducting an audit. Thus, the study models the extent of audit evidence with reference to the aggregation of different types and combinations of evidence and the linkage between the risk assessment and the extent of evidence that provides a flexible framework for the application of professional judgement regarding the gathering of audit evidence. / Auditing / D. Com. (Auditing)

Audit evidence enables the auditor to express an opinion on the financial statements. To address the risk that the auditor may express an inappropriate opinion, the nature, timing and extent of audit procedures must be responsive to the assessed risks of material misstatement. The auditor must aggregate the levels of assurance obtained from different combinations of tests of controls, substantive analytical procedures and tests of details to respond to the assessed risks. These evidence planning decisions are complex and require professional judgement. Research has found that the extent of audit procedures is not linked to the assessed risks and that auditors may not know to aggregate evidence from different types of audit procedures. Research also supports the use of a structured audit methodology that includes decision models, to guide the application of professional judgement. This leads to the overall objective of this study: the development of an integrated audit evidence planning model to quantify the extent of audit evidence. The study employs a grounded theory model building approach, interpreting the relevant concepts and principles from the literature review into the development of the model. The integrated audit evidence planning model quantitatively relates the extent of audit evidence in a logical and structured manner with the risk assessment and three distinct overall levels of assurance needed to support the audit opinion. It uses the cumulative nature of audit evidence and the compensatory inter-relationship between tests of controls, substantive analytical procedures and tests of details to quantitatively aggregate the extent and levels of assurance from the different combinations of procedures to obtain reasonable assurance at the required overall level of assurance. The model provides a framework for influencing and guiding the exercise of professional judgement and is a practical and effective tool to benefit the users thereof when conducting an audit. Thus, the study models the extent of audit evidence with reference to the aggregation of different types and combinations of evidence and the linkage between the risk assessment and the extent of evidence that provides a flexible framework for the application of professional judgement regarding the gathering of audit evidence. / Auditing / D. Com. (Auditing)