Haphazard Sampling: Selection Biases Induced by Control Listing Properties and the Estimation Consequences of these Biases

Abstract

Haphazard sampling is a nonstatistical technique used by auditors to simulate a variety of random sampling techniques when testing the error status of accounting populations. In this study, we compare the properties of haphazard samples selected from control listings with the properties of simple random samples. We hypothesize that control listing entries exhibit salience values that result from the effort required to locate entries and the visual properties of entries. We further hypothesize these salience values influence sample selections and result in sample properties that are different from those of simple random samples. To test these hypotheses, we examine the properties of haphazard samples selected by three participant groups. In each group, sample properties differ from those of simple random sampling and include a lack of independence across sample selections and biased sample inclusion probabilities. We also develop models showing how biased sample inclusion probabilities influence error projections and discuss the estimation consequences of these biases. Data Availability: For information about data availability, please contact the first author.

Haphazard Sampling: Selection Biases and the Estimation Consequences of These Biases

“…The combined findings of Hall et al (2012) and those of Hall et al (2000Hall et al ( , 2001 suggest that the properties of haphazard samples, whether chosen from control listings or from the actual population, are likely to differ from those of random samples. Subconscious effort minimization and diversification behaviors, coupled with visual perception artifacts, yield samples that violate requirements for independence and equal selection probability.…”

“…The accounts receivable control listing consisted of 22 pages with 792 customer accounts, while the inventory control listing consisted of 26 pages with 1,404 inventory items. Line entries exhibited diverse visual properties (details are available in Hall et al [2012]). We then conducted three experiments in which participants were instructed to select haphazard samples from the control listings.…”

“…Our recently published study, ''Haphazard Sampling: Selection Biases Induced by Control Listing Properties and the Estimation Consequences of These Biases'' (Hall et al 2012; hereafter, ''our study'' or ''the study''), provides empirical evidence concerning the reliability of haphazard sampling as a substitute for random sampling. Haphazard sampling is a nonstatistical technique used to approximate random sampling by selecting sample items without any conscious bias and without any specific reason for including or excluding items (AICPA 2012, 31).…”

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SUMMARY:This article summarizes our recent study, ''Haphazard Sampling: Selection Biases Induced by Control Listing Properties and the Estimation Consequences of These Biases' ' (Hall et al 2012). Haphazard sampling is a nonstatistical technique used by auditors to simulate random sampling when testing the error status of accounting populations.

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Comments of the Auditing Standards Committee of the Auditing Section of the American Accounting Association on Proposed Statement on Auditing Standards (SAS), Audit Evidence

“…For example, Hall, Herron, Pierce, and Witt (2001) find selection bias in haphazard sampling is reduced by increasing the sample size. Also, avoiding starting sample selection on the first page of control listings and proceeding through control listings in a serial fashion could mitigate sample selection bias caused by visual attributes of listed information (i.e., page location, line location, listing characteristics) (Hall, Higson, Pierce, Price, and Skousen 2012).…”