Random Selection

---
name: audit-support-random-selection
description: 'Sub-skill of audit-support: Random Selection (+4).'
version: 1.0.0
category: business
type: reference
scripts_exempt: true
---

# Random Selection (+4)

## Random Selection


**When to use:** Default method for transaction-level controls with large populations.

**Method:**
1. Define the population (all transactions subject to the control during the period)
2. Number each item in the population sequentially
3. Use a random number generator to select sample items
4. Ensure no bias in selection (all items have equal probability)

**Advantages:** Statistically valid, defensible, no selection bias
**Disadvantages:** May miss high-risk items, requires complete population listing


## Targeted (Judgmental) Selection


**When to use:** Supplement to random selection for risk-based testing; primary method when population is small or highly varied.

**Method:**
1. Identify items with specific risk characteristics:
   - High dollar amount (above a defined threshold)
   - Unusual or non-standard transactions
   - Period-end transactions (cut-off risk)
   - Related-party transactions
   - Manual or override transactions
   - New vendor/customer transactions
2. Select items matching risk criteria
3. Document rationale for each targeted selection

**Advantages:** Focuses on highest-risk items, efficient use of testing effort
**Disadvantages:** Not statistically representative, may over-represent certain risks


## Haphazard Selection


**When to use:** When random selection is impractical (no sequential population listing) and population is relatively homogeneous.

**Method:**
1. Select items without any specific pattern or bias
2. Ensure selections are spread across the full population period
3. Avoid unconscious bias (don't always pick items at the top, round numbers, etc.)

**Advantages:** Simple, no technology required
**Disadvantages:** Not statistically valid, susceptible to unconscious bias


## Systematic Selection


**When to use:** When population is sequential and you want even coverage across the period.

**Method:**
1. Calculate the sampling interval: Population size / Sample size
2. Select a random starting point within the first interval
3. Select every Nth item from the starting point

**Example:** Population of 1,000, sample of 25 → interval of 40. Random start: item 17. Select items 17, 57, 97, 137, ...

**Advantages:** Even coverage across population, simple to execute
**Disadvantages:** Periodic patterns in the population could bias results


## Sample Size Guidance


| Control Frequency | Expected Population | Low Risk Sample | Moderate Risk Sample | High Risk Sample |
|------------------|--------------------|-----------------|--------------------|-----------------|
| Annual | 1 | 1 | 1 | 1 |
| Quarterly | 4 | 2 | 2 | 3 |
| Monthly | 12 | 2 | 3 | 4 |
| Weekly | 52 | 5 | 8 | 15 |
| Daily | ~250 | 20 | 30 | 40 |
| Per-transaction (small pop.) | < 250 | 20 | 30 | 40 |
| Per-transaction (large pop.) | 250+ | 25 | 40 | 60 |

**Factors increasing sample size:**
- Higher inherent risk in the account/process
- Control is the sole control addressing a significant risk (no redundancy)
- Prior period control deficiency identified
- New control (not tested in prior periods)
- External auditor reliance on management testing