Explain Sampling Risk as It Relates to Both Tests of Controls

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Examlex · Accepted Answer

The Answer is Sampling risk is the risk that the sample chosen by the auditor is not representative of the population of transactions or items within an account balance available for testing and,as a consequence,the auditor arrives at an inappropriate conclusion.When testing controls,sampling risk is the risk that an auditor relies on their client's system of internal controls when they should not do so (that is,the auditor concludes that their client's internal controls are effective when they are ineffective),and the risk that an auditor concludes that their client's internal controls are less reliable than they really are (that is,the auditor concludes that their client's internal controls are ineffective when they are effective).When conducting substantive tests,sampling risk is the risk that an auditor concludes that a material misstatement does not exist when it does or an auditor concludes that a material misstatement exists when it does not.

Explain Sampling Risk as It Relates to Both Tests of Controls

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