A system for companding digital audio signal samples processes the digital audio signal samples to correct errors induced by the compression and expansion processes. These errors are calculated prior to compressing the samples. Such errors are calculated in accordance with a predetermined compression process and a predetermined expansion process; and the digital audio signal samples are corrected in accordance with such calculations prior to compression. The compression process includes providing a 3-bit gain word for a block of 70 samples. The gain word is computed in accordance with the position of the most significant "1" bit in the sample(s) having the peak magnitude. Each individual sample is processed in accordance with the block gain word to compress the sample by reducing the number of magnitude bits. The error calculation process includes calculating an error signal by subtracting a calculated reproduced digital audio signal sample from the digital audio signal sample to be compressed, filtering the error signal by noise-spectral filtering and adding the filtered error signal to the next-providing digital audio signal sample to provide a corrected digital audio signal sample for compression. The error calculation process also includes calculating an error value based upon the effect of using a single gain word for compressing a block of samples. The error value is subtracted from the corrected digital audio signal sample prior to compression. The gain word is forward error corrected by (5,1) encoding to enable detection and correction of both single-bit and double-bit errors in transfer by majority voting. The sign bit and the most significant magnitude bits of the compressed samples are forward error corrected to enable detection and correction of single-bit errors in transfer and to enable detection and concealment of double-bit errors in transfer.