When is it acceptable to adopt a smaller sample size during an audit?

Adopting a smaller sample size during an audit is appropriate when internal controls are considered strong and no exceptions have been reported in previous assessments. This scenario suggests that the likelihood of finding errors or issues is minimal due to effective controls in place. Strong controls typically indicate that processes are functioning as intended, making a smaller sample size sufficient for assessing the overall effectiveness of those controls without compromising the integrity of the audit findings.

When there have been no exceptions reported, auditors can have greater confidence in the reliability of the information and the processes being audited. Therefore, a reduced sample size can still provide a valid basis for drawing conclusions about the population being examined, thus saving time and resources while maintaining audit quality.

In situations where previous audits have indicated exceptions or internal controls are weak, a larger sample size may be warranted to ensure sufficient evidence is gathered to address the raised concerns satisfactorily. Management requests alone should not dictate sample sizes unless supported by documented rationale, as this could compromise the objectivity and thoroughness of the audit process.