What type of sampling allows auditors to measure and control the sampling risk? Random sampling Statistical sampling Nonstatistical sampling Technical sampling
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Situations Favoring Statistical Sampling: - When auditing large, homogeneous populations such as a high volume of retail transactions, statistical sampling can objectively quantify errors. For example, an auditor examining thousands of small transactions in a retail chain may use statistical methods to determine the overall error rate with confidence. - In cases where the client’s internal controls are well established and data is abundant, the objectivity of statistical sampling can provide a clear picture of the risk. • Situations Favoring Nonstatistical Sampling: - When dealing with smaller populations or unique items that do not easily lend themselves to random selection, nonstatistical sampling may be more efficient. For instance, a company’s fixed asset review—where items such as machinery are few and unique—may be better served by an auditor’s judgment rather than complex statistical sampling. - In audits involving specialized or high-risk areas with limited transactions, such as a one-time legal settlement or an unusual adjustment, an auditor might select a nonstatistical sample based on risk factors rather than applying a random sampling technique.
Jennifer S.
What are the advantages and disadvantage of statistical and non statistical audit sampling respectively?
Mauya M.
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