What does sampling risk refer to in the context of auditing?

Sampling risk in auditing specifically pertains to the possibility that conclusions drawn from a sample may not accurately represent the full population from which the sample is taken. In this context, auditors utilize samples to gather evidence about the characteristics of a population because it can be impractical or impossible to assess every single item.

When an auditor evaluates a sample and makes inferences, there's a risk that those inferences—such as the existence of errors or misstatements—may differ if the entire population were examined. This discrepancy arises from the inherent limitations of sampling, including the chance that the sample may not capture the variability or the characteristics present in the entire population.

Thus, the essence of sampling risk is centered on the uncertainty and potential for error in conclusions based on partial data, highlighting the importance of selecting an appropriate sample size and method to mitigate this risk.