Determining the appropriate sample size is a critical part of audit sampling and is influenced by several key factors: sampling risk, tolerable rate of deviation, expected population deviation, and population size. Each of these aspects affects the level of assurance the auditor can obtain from the sample results.

Sampling risk is the risk that the auditor’s conclusion based on the sample differs from the conclusion that would be reached if the entire population were tested. To reduce sampling risk, a larger sample size is often needed. The tolerable rate of deviation represents the maximum error rate the auditor is willing to accept without altering the audit conclusion. A lower tolerable rate increases the sample size. Expected population deviation refers to the auditor’s estimate of the likely error rate based on past experience or preliminary testing. The higher the expected deviation, the larger the sample needed to detect it. Lastly, population size has a smaller effect but still matters, especially when populations are small.

For example, when auditing a company’s purchase approvals, if the auditor expects few errors but sets a low tolerable deviation rate and wants to minimize sampling risk, a larger sample will be selected to provide sufficient confidence in control effectiveness.