i. When population is small, statistical sampling will create an unacceptable margin of error. If the population is not sufficiently large, then statistical methods are invalid. Instances where transactions or balances are small in number but material in relation to financial statements e.g. directors fees should never be sampled and any transactions involving a large capital expenditures.
ii. Any situation where the auditor is put on high alert a result of earlier tests or information is received indicating material fraud in a certain accounting areas.
iii. For statutory disclosure items such as director’s salaries, a full audit check is desirable because materiality consideration does not apply in this case.
iv. Where population is not homogeneous and requires stratification, it is not possible to select a representative sample.
v. When the population has not been maintained in a manner suitable for audit sampling e.g. if sales invoices are filed according to customer name as opposed to a numerical order.
Wilfykil answered the question on April 11, 2019 at 13:52
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