Question 1. 1. Define, and differentiate between, nonstatistical (judgmental) sa

Q: Question 1. 1. Define, and differentiate between, nonstatistical (judgmental) sa

1.Non statistical, also known as, judgmental sampling is when the auditors estimate sampling risk by using professional judgment rather than statistical techniques. Statistical sampling allows the auditors to measure and control samplingrisk. They are based upon the laws of probability.

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Question 1.

1. Define, and differentiate between, nonstatistical (judgmental) sampling and statistical sampling.

Question 2.

2. Describe the difference between sampling risk and nonsampling risk.

Question 3.

3. (LO 9-1, 5) CPAs may decide to apply nonstatistical or statistical techniques to audit testing.

List and explain the advantages of applying statistical sampling techniques to audit testing.

List and discuss the decisions involving professional judgment that must be made by the CPAs in applying statistical sampling techniques to tests of controls.

You have applied attributes sampling to the client's pricing of the inventory and discovered from your sampling that the sample deviation rate exceeds your tolerable rate. Discuss the courses of action you take.

Question 4:

The use of statistical sampling techniques in an audit of financial statements does not eliminate judgmental decisions. Required:

Identify and explain four areas in which judgment may be exercised by CPAs in planning a statistical test of controls.

Assume that the auditors' sample shows an unacceptable deviation rate. Discuss the various actions that they may take based upon this finding.

A nonstratified sample of 80 accounts payable vouchers is to be selected from a population of 3,200. The vouchers are numbered consecutively from 1 to 3,200 and are listed, 40 to a page, in the voucher register. Describe four different techniques for selecting a random sample of vouchers for inspection.

Explanation / Answer

1.Non statistical, also known as, judgmental sampling is when the auditors estimate sampling risk by using professional judgment rather than statistical techniques. Statistical sampling allows the auditors to measure and control samplingrisk. They are based upon the laws of probability.

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Question 1. 1. Define, and differentiate between, nonstatistical (judgmental) sa

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