- 17 Marks
AA – L2 – Q60 – Audit Sampling
Define sampling risk in the context of audit sampling. List and explain five methods of sample selection used in audit sampling.
Question
Sampling
ISA 530 Audit Sampling defines audit sampling as:
‘The application of audit procedures to less than 100% of the items within a population of audit relevance such that all sampling units have a chance of selection in order to provide the auditor with a reasonable basis on which to draw conclusions about the entire population.’
Required:
(a) Define sampling risk.
(1 mark)
(b) List five methods of sample selection and explain how they function.
(10 marks)
(c) Which of the above sample selection methods in part (b) would you use if you wanted to maximise the opportunity of having high-value items in your sample? Explain why.
(3 marks)
(d) Define ‘tolerable misstatement’.
(1 mark)
(e) List five situations where sampling may not be appropriate.
(5 marks)
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