What is Variables Sampling?

Variables sampling is the process used to predict the value of a specific variable within a population. For example, a limited sample size can be used to compute the average accounts receivable balance, as well as a statistical derivation of the plus or minus range of the total receivables value that is under review. By using variables sampling, someone involved in auditing the books of a business or who is examining its product quality can make inferences about the population from which a testing sample was drawn.

Example of Variables Sampling

As an example of variables sampling, a company wants to audit its financial records for potential errors in invoice processing. The population consists of 10,000 invoices for the fiscal year. The variables of interest are invoice amount, date, and vendor ID. The sampling steps are as follows:

Define the sampling criteria:

Focus on invoices where the amount exceeds $10,000.
Randomly select invoices from three major vendors.
Include invoices from the last quarter of the year.

Sampling Process:

Extract all invoices from the database that meet the criteria (e.g., amount > $10,000, associated with the selected vendors, and dated in the last quarter).
From this subset, use random sampling to select 100 invoices for detailed auditing.

Examine Variables:

For each selected invoice, review the following: