An auditor while verifying the sales during the year observed that the sales transactions in that year are more than 1 lakh in number. He wants to…

Statistical Sampling – More Scientific: Audit testing done through this approach is more scientific than testing based entirely on the auditor's own judgment because it involves the use of mathematical laws of probability in determining the appropriate sample size in varying circumstances.Statistical sampling has reasonably wide application where a population to be tested consists of a large number of similar items, and more in the case of transactions involving compliance testing, trade receivables' confirmation, payroll checking, vouching of invoices and petty cash vouchers. In larger organizations, with huge transactions, statistical sampling is always recommended as the samples selected are not prejudged.There is no personal bias of the auditor in case of statistical sampling. Since it is scientific, the results of sample can be evaluated and projected on the whole population in a more reliable manner. In the instant case, an auditor while verifying the sales during the year observed that the sales transactions in that year are more than one lakh in number. In such case, statistical sampling will be highly recommended in the audit program. Random Sampling is the method he can decide to choose sample in such a situation.