AUD Simulations

Question 1

Nonstatistical sampling

Answer 1

is permitted under generally accepted auditing standards because they can provide sufficient evidential matter. Both statistical and nonstatistical sampling require auditor judgment in planning, performing and evaluating a sample, and in relating the evidential matter produced by the sample to other evidential matter when forming a conclusion about the related account balance or class of transactions.

Question 2

Sampling risk is a component of audit risk

Answer 2

Audit risk is composed of inherent risk, control risk, and detection risk. Detection risk involves sampling risk and non sampling risk (human error). Sampling risk arises from the possibility that when a test is limited to a sample of transactions, the auditor’s conclusion about the transactions may be different than if all the items were tested.

Question 3

Variable sampling and Discovery Sampling

Answer 3

Variable sampling is used to predict the value of a given variable and is used in substantive testing and not when testing controls. Discovery sampling is used when the auditor believes that the population occurence rate is near zero. It is a special case of attribute sampling.