Why auditor resort to sampling? Provide examples in support of your answer
The easiest way to understand the concept of auditing, regardless the genre, is to think of the words "inspection," or "evaluation." Whenever you do work as an auditor, think of yourself as an inspector or evaluator.
Here's an example about inspection. You work at a grocery store in Arizona and it's in the middle of August - man, it's really hot outside! Your store manager walks up to you and says, "I just came from the stockroom loading dock and it looks like a warehouse truck driver made a delivery earlier today. He just left the load sitting outside and left. There's 12 pallets of apples sitting out there in the sun! They're probably all ruined. I need you to go back there and inspect those apples to see if they're all spoiled. Come get me when you're done."
As you're standing there thinking of the lousy task your manager gave you, it dawns on you that your work shift is over in 20 minutes. The only thing your manager hates worse than one of his teenage clerks asking a lot of stupid questions is...when one of them does not clock-out at the right time and has to pay you overtime for the extra minutes! You stare at the 12 pallets of apples, knowing there's no way you can inspect all of those apples in 20 minutes.
Your best friend walks up and you explain the "no win" situation you're in. Your buddy tells you not to worry, he has an idea. "So, what you do is blah, blah, blah..."
Twenty minutes later you've clocked out and are leaving with your coat & your manager sees you and yells, "Hey did you get all those apples inspected?" You yell over your shoulder, "Yeah, I'm all done; I didn't find any spoilage and I brought them all inside, too." You jump in your car smiling...gee, it didn't turn out to be such a bad day after all.
Later your manager goes to the stockroom and sees the pallets lined-up, and another clerk is about to haul a box of apples out to the produce area. The boss grabs a few apples from the kid as he walks by, and notes the apples look perfectly fine. He shrugs his shoulders and walks off munching on an apple.
How did the young clerk inspect 12 pallets, make a correct decision about none of them being ruined AND move them all inside in 20 minutes?
He used sampling. Sampling has proven to be a statistically valid means of determining the outcome of a decision without checking 100% of a known population of attributes. One of the most common tools used for statistical attribute sampling was first developed nearly 80 years ago by the U.S. military for conducting attribute sampling for any population of manufactured goods they were buying from a defense contractor. The sampling plan tool is known as MIL-STD-105D.
MIL-STD-105D has been used worldwide, including auditing of any attribute. In nearly every case where there is a large population of attributes to audit, inspect or evaluate, it is often impractical & would cost too much for an auditor or inspector to apply certain examination criteria on 100% of a population. If an auditor is trying to determine if certain inventory records have correct transactions & there are 10,000 records in the population, it could take several weeks to audit all of them.
An auditor, however, can use MIL-STD-105D or other commonly accepted sampling plan, which will indicate a very small sample size of the 10,000 records taken randomly, must be checked and found correct, in order to indicate with high probability that all 10,000 records are correct.