Everything you need to know about audit sampling conducted by external auditors in Dubai

What is audit sampling in Dubai, Abu Dhabi, Sharjah, UAE? 

It is not possible and even rational for audit companies in Dubai to test all of the items of an account that have taken place during a particular year. That’s why they have to select samples from these transactions that should be representative of the real transaction scenarios. 

For any class transaction, if all of the items are checked, then it cannot be described as sampling rather for this specific transaction item, auditing has been made based on population.

Audit firms in Dubai normally use any of these two ways- random selection or non-statistical selection of sampling. For the former one, statistical procedures and the concept of probability is used while in the latter case, auditors intentionally select sample with specific purposes. 

Their criteria for the selection of items may vary based on their intentions and end goal of auditing.  They may choose items that are significant in terms of monetary value or that seem to be unusual.

What factors do affect the sample size of auditing in Dubai, Abu Dhabi, Sharjah, UAE? 

The minimum and maximum range of sample sizes are defined by Dubai’s audit companies to make sure no material items are subsided. And these are the influencing factors for external auditors in determining what the size of the sample will be. 

1. When auditors in Dubai want to gain a higher level of confidence and understanding of clients’ business environment, a larger amount of sample is selected.
2. Auditor’s requirement for a larger sample unit indicates they have to rise their sample size.
3. When there is a possibility that any material misstatement will affect the business deeply, auditors will not take the risk of incurring a significant level of sampling error. 
4. When auditors find expected error to be more in the middle of their auditing stage than the level of expected error they estimated in the planning stage, sampling size is increased for testing accuracy.
5. A fall in the level of tolerable error will give rise to sample size.

How do auditors in Dubai design audit sampling in Dubai, Abu Dhabi, Sharjah, UAE?

While designing sampling from the population of financial accounts, external auditors in Dubai normally consider these issues- 

1. Sampling techniques to be used; 
2. Characteristics and nature of the population of attestations; 
3. The purpose for which sampling is being conducted; 
4. Scope of work and limitations auditors may experience; 
5. Attributes of the audit-proof that will be used to verify the selected items; 

Sampling error is a constraint that audit firms in Dubai experience and they try several mechanisms additionally to eliminate this type of error. Even population transactions from which samplings are selected may contain errors. The testing tool and control system through which classes of the transaction of the client organization are assessed may also possess shortcomings and errors.

One approach through which auditors minimize errors is to broaden the sampling size but they have to analyze cost-benefits trade-off. When verifying any material items, they can select a large sample and thus can raise the relevance of their attestation as well as can reduce the possibility of errors. 

In the planning stage, audit companies in Dubai define the extent of errors they will tolerate after assessing control systems. While evaluating the internal control system of a business, if the actual level of inefficiency of the system to detect any defined inconsistency is higher than the tolerable level of inefficiency, it indicates auditors’ necessity to demonstrate qualified opinion on that particular control system.

Due to the significance of tolerable error in auditors’ final decision making, while designing the sampling, it is, the sample size is chosen accordingly. The lower value of tolerable error signifies the requirement of a larger sample size and vice versa. 

How do auditors in Dubai select the sample? 

Systematic selection method: The entire population of a class of transactions is categorized into several ranges and a range of intervals is defined by the auditors. Samples will be selected based on the defined intervals.

Random selection: Items for auditing will be selected randomly that will generate the same probability for being selected as sampling irrespective of their materiality or significance for the business or users of information. 

Monetary unit sampling: Like random sampling, this sampling method also gives equal chance to every monetary item. The main difference lies in the full possession of MUI method by the computer system that makes the sampling selection process more effective. 

Haphazard selection method: This method is a biased one where based on the intention, time, and resource constraints of external auditors, sample units are selected. 

How do audit companies in Dubai conclude from the sampling?

The main purpose of external auditors in Dubai, UAE behind conducting sampling is to provide a conclusion for the population-based on those samples. And in testing the samples, if true errors are found, then auditors will check whether it is material or not. When they will find differences in the source and recording documents of a material item frequently, they will regard it as a true error. But they will not consider anomalous error as relevant to report as it is a one-time error detected in the system.

For enquiries, call +971 5679 52590 / E-mail: info@aviaanaccounting.com

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