1. What Is Sample Size Calculation For Audit?

Sample size calculation for audit determines the number of items or transactions that need to be examined to achieve statistically valid results. It ensures the audit sample is representative of the entire population while maintaining efficiency and reliability.

2. How Does The Calculator Work?

The calculator uses the sample size formula:

Where:

• \( n \) — Sample size
• \( Z \) — Z-score (confidence level)
• \( E \) — Margin of error
• \( p \) — Estimated proportion

Explanation: The formula calculates the minimum sample size needed to achieve desired confidence level and precision for audit testing.

3. Importance Of Sample Size In Auditing

Details: Proper sample size ensures audit conclusions are statistically valid, reduces sampling risk, provides defensible evidence, and optimizes audit resources while maintaining professional standards.

4. Using The Calculator

Tips: Enter Z-score based on confidence level (1.96 for 95%, 2.58 for 99%), margin of error as decimal (0.05 for 5%), and estimated proportion as decimal (0.5 if unknown).

5. Frequently Asked Questions (FAQ)

Q1: What Z-score should I use for audit sampling?
A: Typically 1.96 for 95% confidence level, but may vary based on audit risk assessment and materiality considerations.

Q2: How do I determine the margin of error?
A: Based on materiality and precision required. Common values are 5% (0.05) for moderate precision or 3% (0.03) for higher precision.

Q3: What if I don't know the proportion?
A: Use 0.5 (50%) as it provides the most conservative (largest) sample size estimate.

Q4: When should I use this formula?
A: For attributes sampling in compliance testing, internal controls testing, and substantive testing of transactions.

Q5: Are there limitations to this approach?
A: Assumes normal distribution, random sampling, and may need adjustment for small populations or stratified sampling scenarios.