Effective Date: April 1, 2016

Applicable FAM Policies: 103 - Approval Authorities

Applicability: GNW Departments and Public Agencies

Interpretation

The policy supports the use of sound statistical sampling which determines the sample size objectively according to the desired degree of confidence. Samples are selected in an unbiased and representative fashion. Sampling intentionally biased toward certain sources of transactions or those suspected of being error prone, for example, is judgmental sampling. Sound statistical sampling is recommended over judgmental sampling because it ensures that the conclusion drawn from the sample results will be reliable and statistically supportable.

The first step in implementing sampling is to complete a feasibility study to determine the current state of the account verification process. Once determined that sampling is feasible, a sampling plan needs to be developed and approved by the Director of Finance, or equivalent. A sampling plan sets out departmental policy and procedure statements and related data gathering and reporting requirements.

The sampling plan should be documented and understood by all staff involved in its implementation. The plan should be updated and approved on a regular basis and provide information including: sampling populations and transaction streams, sampling review period, point of testing (pre or post payment), the sampling approach (statistical or other), the critical errors, the maximum tolerable error rate, and the method of sample selection (manual or computerized), methodology assumptions to determine sample sizes for transaction streams. The sampling plan should also identify the evaluation and reporting that will follow the sample period as well as the approaches to corrective action.

Sampling techniques chosen should be sufficiently precise to allow conclusions to be drawn about the overall adequacy and reliability of the account verification process.

Criteria to identify risk level of transactions should include consideration of the type of transaction, the dollar value, and where appropriate, the current error rate from particular organizations. That is, if the Accounting Officer is not confident about the adequacy of verification, transactions may be classified at a higher level of risk for a period of time