Sample of one: Indispensable or indefensible?;

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The Sample of One: Indispensable or Indefensible?
Gregory M. Boni1
Touche Ross & Co.
Discussions and controversies among auditors about sample size have long been active. I personally experienced them since, at least, when detailed audits were becoming universally recognized as unable to serve society's needs for information about ever-enlarging enterprises. Today, however, a new relevance and urgency arises about the question of sample size. Uncensored answers to the question may present a challenge to the entire philosophical underpinning of auditing practice.
The new relevance arises because of two—not entirely unrelated—develop­ments.
The first is the articulation of Systems Theory. The second is the grow­ing
loudness of the cry by Society that the justification for technology has not been based upon humanistic values. Demands are growing that creators and users of technology be responsible for whether it contributes to or detracts from human welfare. Increasing attacks come from Society against values which give virtue to technology with assertions that objectivity or freedom overrides re­sponsibility
for human impact.
Challenge to Auditors
What is the relevance to auditors of this advancing environment? If the profession believes this is an environment in which it can survive by circum­scribing
itself so that the quality of its work will be judged only by its peers then it can continue on its present course. The peers can continue to argue about 95% confidence limits, or 50% limits. They can argue about how to combine compliance testing with substantive testing. Once they agree with each other about all these standards or procedures, all will be solved. Certainty will be achieved on how one's work will be judged. The upper hierarchy of knowledge will be in the saddle.
However, Society's enlarging position makes me believe that users of financial information will continue to shout—ever louder: "Hey! You guys aren't talking about anything that affects me! You argue about standards and practices of auditing in areas that by careful definition exclude what I want to know. Are the financial statements a fair presentation2 of the information I need for my decisions? I don't feel any better if unfair presentation comes from management fraud, collusion, or because generally accepted accounting principles bring about that kind of result."
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