- 1 Marks
AA – L2 – SA – Q5.5 – Sampling Non-Current Assets Level
Question
When testing non-current assets for the valuation assertion, identify whether each of the below factors would necessitate a decrease in the sample size, an increase in the sample size or would have minimal impact on the sample size.
- Stratification of the population
- A significant increase in the number of other substantive procedures directed at the same assertion
A Decrease
B Increase
C Minimal impact
D Decrease
E Increase
F Minimal impact
Answer
A, D
Explanation:
- Stratification of the population (dividing it into homogeneous groups) increases efficiency, allowing a decrease in sample size (A).
- A significant increase in other substantive procedures for the same assertion reduces reliance on the sample, also decreasing sample size (D). These factors optimize audit effort while maintaining assurance, making A and D the correct answers.
- Tags: ICAG, Non-current Assets, Sampling, Valuation Assertion
- Level: Level 2
- Topic: Audit and Assurance Evidence
- Uploader: Salamat Hamid