Sampling risk definition

What is Sampling Risk?

Sampling risk is the possibility that the items selected in a sample are not truly representative of the population being tested. This is a major issue, since an auditor does not have the time to examine an entire population and so must rely upon a sample.

Types of Sampling Risk

There are two types of sampling risk that can arise. They are as follows:

Risk of incorrect acceptance . An auditor erroneously concludes that there are fewer problems with the population than expected. This means that there is actually a significant risk of a material misstatement, which can lead to an incorrect auditor’s opinion on a client’s financial statements.
Risk of incorrect rejection . An auditor erroneously concludes that there are more problems than expected, and so expands the sample size to see if this is really the case, which is not a good use of his or her time. The result may be a substantial additional effort on unnecessary testing, or the use of a replacement test.