1. Introduction to the Technique
Judgmental sampling, also known as non-statistical or purposive sampling, is a method where the internal auditor selects items for testing based on professional judgment, experience, and risk assessment, rather than random or systematic selection. It is especially useful when the auditor wants to focus on transactions that are more likely to have errors, such as high-value items, unusual entries, or areas where past issues have occurred. Unlike statistical methods, this technique doesn’t aim to generalize results across the population but rather to detect significant risks or control weaknesses.

2. Practical Template for Applying Judgmental Sampling
A simple and effective template for judgmental sampling includes:

• Audit Objective (e.g., Assess effectiveness of travel expense reimbursements)

• Sampling Criteria (e.g., amounts over $5,000, weekend travel, repeat travelers)

• Items Selected (Transaction ID, Employee, Date, Amount, Description)

• Reason for Selection (Why this transaction was chosen)

• Test Performed (Document review, policy compliance, approval validity)

• Result/Findings (Pass/Fail, control issues)

• Auditor Notes

This template helps maintain transparency in how and why specific items were chosen and keeps the process aligned with audit objectives.

3. Application at ACME Corp: Travel & Entertainment Expenses Audit
At ACME Corp, CEO Liora has requested an audit of Travel & Entertainment (T&E) expenses, citing concerns over potential abuse. Internal Auditor Auren, with support from Project Manager Aven, decides to use judgmental sampling to review T&E reimbursements from the last six months.

Using the judgmental template, Auren identifies these sampling criteria:

• Expense claims over $5,000

• Trips approved by exception

• Travel overlapping with public holidays

• Claims from frequent travelers

From over 1,000 T&E reports, Auren selects 30 transactions matching one or more of the criteria. For example:

• A $7,200 claim from a senior sales executive for a client dinner in Las Vegas.

• A weekend hotel stay reimbursed during a business trip scheduled for Monday.

• Three reports from the same employee, each barely under the approval threshold.

Upon review, Auren finds:

• Five claims lacked receipts, breaching policy.

• Two trips were not properly pre-approved.

• One report included personal entertainment expenses, violating ACME’s code of conduct.

These findings are not statistically generalizable, but they uncover control breakdowns and behavioral patterns that would have been missed with random sampling.

In his report, Auren recommends:

• Tightening policy enforcement.

• Mandatory pre-approvals for travel.

• A monthly exception report for executive review.

Judgmental sampling, when applied with clear criteria and professional skepticism, enables internal auditors like Auren to target high-risk areas quickly and effectively, making it a vital tool for focused audits where quality of insight matters more than statistical inference.