Statements or Examples That Relate to Audit Sampling Are Listed

question 45

Short Answer

Statements or examples that relate to audit sampling are listed below. Match the statements 1 through 5 to the term (A through D) that it best describes and place the identifying letter in the space provided.
A: Statistical sampling
B: Non-statistical sampling
C: Sampling risk
D: Non-sampling risk
____ 1. Jones CPA selected a sample and evaluated the results of her sample using the laws of probability.
____ 2. Wilson CPA checked to see if there were any signatures in the credit approval box on a sample of sales orders rather than looking only for authorized signatures.
____ 3. Based on a statistical sample, Jackson CPA concluded that the client's control system was working on an acceptable basis when in fact the population deviation rate was unacceptable.
____ 4. For his sample Barnum CPA selected all invoices over $1,000 and all invoices recorded on the 15^th of each month.
____ 5. When a client could not produce an invoice for a sample selected by the auditor, the auditor accepted the client's assurance that the invoice contained the appropriate approval.

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Definitions:

Retail Toy Store

A business that specializes in selling toys directly to consumers.

Heuristics

Shortcuts or rules of thumb used to make decisions.

Loss Aversion Technique

A psychological strategy used in various fields, including investing and marketing, that leverages the individuals’ tendency to prefer avoiding losses to acquiring equivalent gains.

Decision Making

The process of making choices by identifying a decision, gathering information, and assessing alternative resolutions.