Which of the Following Is Not an Advantage of probability-Proportional-To-Size

question 26

Multiple Choice

Which of the following is not an advantage of probability-proportional-to-size (PPS) sampling?

• A) PPS systematic sample selection automatically identifies any item that is individually significant if its value is less than an upper monetary cutoff.
• B) PPS sampling, if the auditor expects no misstatements, will usually result in a smaller sample size than under classical variables sampling.
• C) PPS sampling automatically results in a stratified sample.
• D) It is generally easier to use than classical variables sampling.
• E) The size of a PPS sample is not based on any measure of the estimated variation of audit values.

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Definitions:

Economic Entity

A unit such as a company or organization that performs economic activities and is capable of possessing assets, incurring liabilities, and conducting business transactions.

Direct Ownership Interest

A situation where an individual or entity directly owns shares or stakes in a company, allowing for direct control or influence over the company.

Ownership Interest

A share or stake denoting possession or control in a company, allowing the holder certain rights and privileges.

Indirect Non-Controlling Interest

A non-controlling interest that a parent company has in a subsidiary through another subsidiary or subsidiaries, complicating the calculation of ownership percentages.