ABSTRACT
This chapter covers the fundamental assumptions underlying the use of sampling techniques, the nature of populations, and the use of variables. Distribution frequencies and central tendency measurement will be covered as well as the impact on analysis of distribution characteristics. Generically, audit use of statistical sampling within a business can be described as the collection, summarization, analysis, audit, and reporting of numerical findings relevant to a business decision or situation. Statistics as we know them today trace their origins to the work carried out by Carl Friedrich Gauss who, in the early 1800s, developed various principles that became an integral part of statistics as well as probability theory. Statistical sampling is a technique used to permit the auditor to reduce the amount of testing whereby, instead of examining every item within the overall population against specified audit criteria, the testing may be done on a significantly lower number selected on a statistically valid basis.
