CASE STUDIES ON

STATISTICS AND
SAMPLING IN AUDIT
BY GAURAV KUMAR PRAJAPAT
SR. AUDIT OFFICER
A comparative study of different
samples in a single organisation

Rajasthan State Road Transport

Corporation
 Administrative Set up
Zones 10
(which administrated by Zonal (Jaipur, Ajmer, Bharatpur, Bikaner, Jodhpur, Udaipur,
Managers) Kota, Deluxe, Sikar and JCTSL)
Depots 51
Central Workshops 3
Central Warehouse 1
Tyre Redreding workshop 1
Bus Stands 67
Buses
Own 4271
Contracted 209
Total Buses 4480
Routes 2421
Daily Passengers 8.57 Lac
Sample Design will depend on type of
audit and its objectives
We will take example of three different audit
assignments.
1. Comprehensive Performance Audit
2. Performance Audit on Passenger Amenities
3. Audit of Annual Accounts
Considerations while selecting a sample

Sample design
 Sample design covers the method of selection, the sample structure and plans for
analysing and interpreting the results.
 The design will impact upon the size of the sample and the way in which analysis is
carried out. In simple terms the tighter the required precision and the more complex the
design, the larger the sample size.
 The design may make use of the characteristics of the population, but it does not have to
be proportionally representative. It may be necessary to draw a larger sample than
would be expected from some parts of the population; for example, to select more from
a minority grouping to ensure that we get sufficient data for analysis on such groups.
Continued..
 Many designs are built around random selection. This permits justifiable inference
from the sample to the population, at quantified levels of precision.
 Random selection guards against bias in a way that selecting by judgement or
convenience cannot.
 However, a random selection may not always be either possible or what is
required, in these cases care must be taken to match clear audit objectives to the
sample design to prevent introducing unintended bias.
Defining the population
 The first step in good sample design is to ensure that the specification of the target
population is as clear and complete as possible to ensure that all elements within
the population are represented.
 The target population is sampled using a sampling frame.
 Often the units in the population can be identified by existing information; for
example, pay-rolls, company lists, government registers etc.
 A sampling frame could also be geographical; for example postcodes have
become a well-used means of selecting a sample.
 Try to obtain the sample frame in the most automated way possible for ease of
sampling; for example a database spreadsheet file.
Sample size
For any sample design deciding upon the appropriate sample size will depend on five
key factors and these are shown below.
 No estimate taken from a sample is expected to be exact, inference to the
population will have an attached margin of error. The better the design, the less
the margin of error and the tighter the precision but in most cases the larger the
sample size.
 The amount of variability in the population i.e. the range of values or opinions,
will also affect accuracy and therefore the size of sample required when
estimating a value. The more variability the less accurate the estimate and the
larger the sample size required.
Continued…

 The confidence level is the likelihood that the results obtained from the sample lie
within the associated precision. The higher the confidence level, that is the more
certain you wish to be that the results are not atypical, the larger the sample size.
Normally 95 % confidence level is used for forceful conclusions.
 Population size does not normally affect sample size. In fact the larger the
population size the lower the proportion of that population that needs to be
sampled to be representative.
 If seeking to sample for attributes as opposed to the calculation of an average
value, the proportion of the population displaying the attribute you are seeking to
identify is the final factor for consideration. This can be estimated from the
information that is known about the population, for example the proportion of
hospitals who consider long waiting lists to be a problem.
Sampling methods
 Cluster sampling
 Convenience sampling
 Judgement sampling
 Multi-stage sampling
 Probability proportional to size
 Quota sampling
 Simple random sampling
 Stratified sampling
 Systematic sampling
Performance Audit on Passenger
Amenities
Audit objectives

 adequate plans and policies were framed to provide

passenger amenities as per norms;
 measures undertaken by the Roadways for cleanliness
and provision of passenger amenities at bus stands and in
buses were effective; and
 a suitable mechanism existed for prompt redressal of
passenger grievances.
Audit methodologies
 review of agenda and minutes of Board meetings as also the annual budget
papers with regard to passenger amenities;
 joint inspection with the Roadways authorities at selected bus stands and buses
to capture actual conditions of passenger amenities;
 administration of survey questionnaire on randomly selected passengers (300
respondents) to elicit passenger perception on various aspects of passenger
amenities and their views on level of maintenance; and
 review of records relating to passenger complaints and action taken thereon.
Bus Stands

Cleanliness at bus stands

 Waste management
 Drainage and Sewerage
 Provision of dustbins
 Inadequacy of cleaning staff
 Public Notices
Bus Stands

Amenities at bus stands

 Waiting hall/shed and seating arrangements
 Facilities of toilets/urinals
 Drinking water
 Display of time table and fare list/provision of enquiry booths.
 Presence of unauthorized vendors/hawkers
Buses

 Cleanliness and passenger amenities in buses

 Cleanliness in buses
 Maintenance of buses
 Amenities in buses
 Reservation of seats for women and disabled passengers
 Complaint and suggestion book
Passenger amenities at Dhabas

The Roadways approved (15 February 2008)

16 dhabas on various routes.
They are private establishments.
They have to follow some set of rules for
approval as stoppage for buses.
User awareness and Safety

 Measures for creating user awareness

 Mechanism for obtaining user perception
 First-aid box
 Stepney and tool box
Selection of sample
 Audit findings are based on examination of records at head office and joint inspections carried
out with the Roadways authorities at selected 17 (25 per cent) bus stands of three categories and
70 buses. The review was conducted during December 2007 to April 2008. The selection of bus
stands was based on stratified random sampling method.
 Performance Audit on
the Working of RSRTC
Audit Objectives
Operational Performance
Financial Management
Fare Policy and Fulfilment of Social Obligations
Monitoring by Top Management
Audit Parameters
 Fleet strength and utilisation
 Vehicle productivity
 Capacity Utilisation
 Maintenance of vehicles
 Manpower Cost
 Fuel Cost
Audit Sample
 The audit examination involved scrutiny of records at the Head Office including
Central Store and Tyre Plant, One Central Workshop and 12 selected depots out of
48 depots. The selection of depots and workshop was made by using “Monetory-
Unit Sampling Method” on the basis of their operating income in 2006-07. The
selected sample had two profit earning depots, 10 loss making depots; one city
serving depot. Operating income of the selected depots constituted 30 per cent of
the total operating revenue of the Corporation.
Audit of Annual
Accounts of RSRTC
System of Accounting
RSRTC records financial transactions at depots level.
Accounts at depots level do not follow accrual system of
accounting.
Necessary adjustments are made at Head Office level.
Deficiency in accounting system at depots level effects the
quality of Annual Accounts of the Corporation.
Depots as accounting units are very homogeneous.
Due to homogeneity, a smaller sample say 10 per cent is
sufficient.
Out of box approach for sampling
Use of satellite images for audit sampling
 Satellite view of
India at Night
Such images could be used for Audit
of Electrification programmes such as
RGGVY, DDUGJY, SAUBHAGYA
etc.
 Air Pollution
This image shows the mean nitrogen
dioxide (NO2) concentration in the air
across India between July 2018 and
May 2019. There is a higher
concentration of NO2 in urban areas like
Delhi, and in the eastern mineral belt
where coal is mined and burnt for
electricity generation.
More such examples at:
https://www.geospatialworld.net/blogs/indias-environmental-challenges-in-10-images/
Performance Audit on Pradhan Mantri
Ujjwala Yojana
 The Report contains the results of Performance Audit on Pradhan Mantri
Ujjwala Yojana (PMUY) which was introduced in May 2016 with the
aim to release LPG connections to BPL women.
 The Scheme is being implemented by three Central Public Sector Oil
Marketing Companies (OMCs) viz. IOCL, HPCL and BPCL.
 As on 31March 2019, total 3.81 crore connections had been released
under PMUY.
Audit objectives
This Performance Audit was conducted to assess the implementation of the scheme as
per the guidelines laid down by the Ministry. Following are the audit objectives for
this Performance Audit:
 Whether PMUY connections have been released and installed by the OMCs to the
eligible and intended households of SECC list after due diligence?
 Whether sufficient measures for enhancement of LPG distribution network have
been undertaken to cater to the PMUY beneficiaries?
 Whether the OMCs have taken steps to ensure the usage of LPG by PMUY
beneficiaries as per the prescribed safety standards and for creating awareness of
the scheme?
 Whether the scheme has led to sustained usage of LPG by PMUY beneficiaries?
Audit Sample and Sampling
Methodology
 As on 31 March 2018, there were 15736 LPG distributors having active PMUY beneficiaries.
Details of OMC-wise distributors and registered and active PMUY beneficiaries with them are
given below:
Audit Sample and Sampling Methodology
Audit selected sample of 164 distributors (1.04 per cent of 15736) based on the
market share of OMCs for detailed scrutiny at the distributors’ end based on the
following risk parameters:
 Number of PMUY LPG connections issued with interest-free loan facility for gas
stove and first refill.
 Number of connections with no refills viz. where the LPG connections had been
issued but were not installed at the premises of the beneficiaries.
 Number of connections with only one refill since release of PMUY connections.
 Number of connections with more than one refill per month.
PA on National Pension System
The Performance Audit of NPS was conducted to assess whether:
i. the system for NPS was established as envisaged;
ii. all eligible subscribers had been covered under NPS;
iii. subscribers were registered within the prescribed timelines, if any;
iv. SCFs were uploaded timely, total contributions (subscribers’ and employers’)
were remitted to Trustee Bank, within prescribed timelines, if any; and
v. NPS is being regulated and monitored in accordance with relevant Acts/
regulations/ orders etc.
PA on National Pension System

Audit Sample
The following five criteria were employed for selecting the sample of Ministries/
Departments/ Autonomous Bodies, in Central Government (Civil accounting formation)
as well as in the States:
• total number of subscribers as on 30 April 2018;
• total amount of arrears’ contribution (employee + employer) between 2008-09 and
2017-18;
• number of instances (DDO-wise and month-wise) where credit was delayed by more
than one year;
• number of transaction IDs10 generated; and
• number of transaction IDs where upload of SCF was after fund transfer to Trustee Bank.
PA on National Pension System

The audit sample covered:

 168 DDOs11 in 07 State Governments
 15 DDOs13 in 02 Union Territories
 74 DDOs14 in 16 Ministries/ Departments of Central
Government under 26 Pr. Aos
 and Records of 3,822 subscribers were scrutinised in audit.
 Thank you
for giving this opportunity to interact with you and
please feel free to contact me in case of any doubt
regarding sampling

Mobile 9461588507