{"id":896,"date":"2020-01-28T13:47:56","date_gmt":"2020-01-28T13:47:56","guid":{"rendered":"https:\/\/alminawi.com\/?p=896"},"modified":"2025-12-07T18:21:33","modified_gmt":"2025-12-07T18:21:33","slug":"tts-series-e-internal-audit-fieldwork-and-evidence-collection-episode-08-stratified-sampling","status":"publish","type":"post","link":"https:\/\/e.americanpro.org\/?p=896","title":{"rendered":"T&#038;Ts Series E, Internal Audit, Fieldwork and Evidence Collection, Episode 07B: (Stratified) Sampling"},"content":{"rendered":"<p data-start=\"105\" data-end=\"725\"><strong data-start=\"105\" data-end=\"141\">1. Introduction to the Technique<\/strong><br data-start=\"141\" data-end=\"144\" \/><strong data-start=\"144\" data-end=\"167\">Stratified sampling<\/strong> is an internal audit technique where the population is divided into subgroups\u2014or strata\u2014based on characteristics such as value, risk, or type of transaction. Samples are then drawn from each subgroup, ensuring better representation and focus on higher-risk areas. This approach is more efficient than random sampling when some categories are riskier than others. At <strong data-start=\"534\" data-end=\"547\">ACME Corp<\/strong>, Internal Auditor <strong data-start=\"566\" data-end=\"575\">Auren<\/strong> uses stratified sampling to focus deeper audits on high-value procurement transactions while still reviewing a representative spread of all activity.<\/p>\n<p data-start=\"727\" data-end=\"848\"><strong data-start=\"727\" data-end=\"776\">2. Practical Template for Stratified Sampling<\/strong><br data-start=\"776\" data-end=\"779\" \/>A useful stratified sampling worksheet includes the following fields:<\/p>\n<ul data-start=\"850\" data-end=\"1243\">\n<li data-start=\"850\" data-end=\"924\">\n<p data-start=\"852\" data-end=\"924\"><strong data-start=\"852\" data-end=\"871\">Audit Objective<\/strong> (e.g., Assess purchasing compliance by value tier)<\/p>\n<\/li>\n<li data-start=\"925\" data-end=\"1012\">\n<p data-start=\"927\" data-end=\"1012\"><strong data-start=\"927\" data-end=\"949\">Strata Definitions<\/strong> (e.g., Low: &lt;$1,000, Medium: $1,001\u2013$10,000, High: &gt;$10,000)<\/p>\n<\/li>\n<li data-start=\"1013\" data-end=\"1048\">\n<p data-start=\"1015\" data-end=\"1048\"><strong data-start=\"1015\" data-end=\"1046\">Population Size per Stratum<\/strong><\/p>\n<\/li>\n<li data-start=\"1049\" data-end=\"1080\">\n<p data-start=\"1051\" data-end=\"1080\"><strong data-start=\"1051\" data-end=\"1078\">Sample Size per Stratum<\/strong><\/p>\n<\/li>\n<li data-start=\"1081\" data-end=\"1128\">\n<p data-start=\"1083\" data-end=\"1128\"><strong data-start=\"1083\" data-end=\"1102\">Sampling Method<\/strong> (Random within stratum)<\/p>\n<\/li>\n<li data-start=\"1129\" data-end=\"1167\">\n<p data-start=\"1131\" data-end=\"1167\"><strong data-start=\"1131\" data-end=\"1165\">Transaction ID and Description<\/strong><\/p>\n<\/li>\n<li data-start=\"1168\" data-end=\"1213\">\n<p data-start=\"1170\" data-end=\"1213\"><strong data-start=\"1170\" data-end=\"1185\">Test Result<\/strong> (Compliant\/Non-compliant)<\/p>\n<\/li>\n<li data-start=\"1214\" data-end=\"1243\">\n<p data-start=\"1216\" data-end=\"1243\"><strong data-start=\"1216\" data-end=\"1243\">Observations and Issues<\/strong><\/p>\n<\/li>\n<\/ul>\n<p data-start=\"1245\" data-end=\"1372\">Stratified sampling can be implemented using Excel filters and random number generation, or more advanced data analytics tools.<\/p>\n<p data-start=\"1374\" data-end=\"1742\"><strong data-start=\"1374\" data-end=\"1434\">3. Practical Application at ACME Corp: Procurement Audit<\/strong><br data-start=\"1434\" data-end=\"1437\" \/><strong data-start=\"1437\" data-end=\"1450\">CEO Liora<\/strong> tasks Auren with auditing the <strong data-start=\"1481\" data-end=\"1511\">Procurement-to-Pay process<\/strong>, which handles thousands of vendor payments annually. Auren, in coordination with <strong data-start=\"1594\" data-end=\"1618\">Project Manager Aven<\/strong> and <strong data-start=\"1623\" data-end=\"1648\">Procurement Head Nina<\/strong>, decides to use stratified sampling based on <strong data-start=\"1694\" data-end=\"1715\">transaction value<\/strong>\u2014a risk-sensitive variable.<\/p>\n<p data-start=\"1744\" data-end=\"1771\">Auren defines three strata:<\/p>\n<ul data-start=\"1772\" data-end=\"1926\">\n<li data-start=\"1772\" data-end=\"1822\">\n<p data-start=\"1774\" data-end=\"1822\"><strong data-start=\"1774\" data-end=\"1822\">Low-value (under $1,000): 3,800 transactions<\/strong><\/p>\n<\/li>\n<li data-start=\"1823\" data-end=\"1875\">\n<p data-start=\"1825\" data-end=\"1875\"><strong data-start=\"1825\" data-end=\"1875\">Mid-value ($1,001\u2013$10,000): 1,200 transactions<\/strong><\/p>\n<\/li>\n<li data-start=\"1876\" data-end=\"1926\">\n<p data-start=\"1878\" data-end=\"1926\"><strong data-start=\"1878\" data-end=\"1926\">High-value (above $10,000): 220 transactions<\/strong><\/p>\n<\/li>\n<\/ul>\n<p data-start=\"1928\" data-end=\"1955\">Given the risk, he selects:<\/p>\n<ul data-start=\"1956\" data-end=\"2076\">\n<li data-start=\"1956\" data-end=\"1995\">\n<p data-start=\"1958\" data-end=\"1995\"><strong data-start=\"1958\" data-end=\"1974\">10 low-value<\/strong> transactions (0.26%)<\/p>\n<\/li>\n<li data-start=\"1996\" data-end=\"2035\">\n<p data-start=\"1998\" data-end=\"2035\"><strong data-start=\"1998\" data-end=\"2014\">20 mid-value<\/strong> transactions (1.67%)<\/p>\n<\/li>\n<li data-start=\"2036\" data-end=\"2076\">\n<p data-start=\"2038\" data-end=\"2076\"><strong data-start=\"2038\" data-end=\"2055\">25 high-value<\/strong> transactions (11.4%)<\/p>\n<\/li>\n<\/ul>\n<p data-start=\"2078\" data-end=\"2091\">Upon testing:<\/p>\n<ul data-start=\"2092\" data-end=\"2405\">\n<li data-start=\"2092\" data-end=\"2161\">\n<p data-start=\"2094\" data-end=\"2161\"><strong data-start=\"2094\" data-end=\"2117\">Low-value purchases<\/strong> mostly pass, with minor documentation gaps.<\/p>\n<\/li>\n<li data-start=\"2162\" data-end=\"2234\">\n<p data-start=\"2164\" data-end=\"2234\"><strong data-start=\"2164\" data-end=\"2187\">Mid-value purchases<\/strong> show <strong data-start=\"2193\" data-end=\"2233\">three instances of missing approvals<\/strong>.<\/p>\n<\/li>\n<li data-start=\"2235\" data-end=\"2405\">\n<p data-start=\"2237\" data-end=\"2405\"><strong data-start=\"2237\" data-end=\"2264\">High-value transactions<\/strong> reveal <strong data-start=\"2272\" data-end=\"2300\">two major control lapses<\/strong>, including a split purchase to avoid approval thresholds and one vendor added without background checks.<\/p>\n<\/li>\n<\/ul>\n<p data-start=\"2407\" data-end=\"2651\">Auren concludes that <strong data-start=\"2428\" data-end=\"2487\">risks and control issues increase with transaction size<\/strong>, validating the use of stratification. His report recommends revising approval workflows and strengthening vendor onboarding protocols for high-value procurements.<\/p>\n<p data-start=\"2653\" data-end=\"2908\" data-is-last-node=\"\" data-is-only-node=\"\"><strong data-start=\"2653\" data-end=\"2729\">Stratified sampling enabled Auren to focus effort where it mattered most<\/strong>, ensuring a comprehensive yet efficient audit. For internal auditors, this technique strikes a balance between risk-based auditing and representation\u2014turning volume into insight.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>1. Introduction to the TechniqueStratified sampling is an internal audit technique where the population is divided into subgroups\u2014or strata\u2014based on characteristics such as value, risk, or type of transaction. Samples are then drawn from each subgroup, ensuring better representation and focus on higher-risk areas. This approach is more efficient than random sampling when some categories [&hellip;]<\/p>\n","protected":false},"author":2,"featured_media":1217,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[22],"tags":[],"class_list":["post-896","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-tt-internal-audit"],"jetpack_sharing_enabled":true,"jetpack_featured_media_url":"https:\/\/e.americanpro.org\/wp-content\/uploads\/2025\/05\/23-37-00-615_512.webp","_links":{"self":[{"href":"https:\/\/e.americanpro.org\/index.php?rest_route=\/wp\/v2\/posts\/896","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/e.americanpro.org\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/e.americanpro.org\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/e.americanpro.org\/index.php?rest_route=\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/e.americanpro.org\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=896"}],"version-history":[{"count":1,"href":"https:\/\/e.americanpro.org\/index.php?rest_route=\/wp\/v2\/posts\/896\/revisions"}],"predecessor-version":[{"id":1301,"href":"https:\/\/e.americanpro.org\/index.php?rest_route=\/wp\/v2\/posts\/896\/revisions\/1301"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/e.americanpro.org\/index.php?rest_route=\/wp\/v2\/media\/1217"}],"wp:attachment":[{"href":"https:\/\/e.americanpro.org\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=896"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/e.americanpro.org\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=896"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/e.americanpro.org\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=896"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}