Which of the following statements best describes the distinguishing feature of s

Question

Which of the following statements best describes the distinguishing feature of statistical sampling as compared to nonstatistical sampling? 15. a tatitical sampling provides for measuring mathematically the degree of unce results from examining only a part of the data. Statistical sampling allows the auditor to have the same degree of confidence as with nonstatistical sampling, but with substantially less work. b. c. Statistical sampling allows the auditor to substitute sampling techniques for audit judgment d. Statistical sampling provides for measuring the actual misstatements in financial statements in terms of reliability and precision.

Explanation / Answer

Solution :

Option a). Best describes the distinguishing feature of statistical sampling as compared to non-statistical sampling.

i.e. Statistical sampling provides for measuring mathematically the degree of uncertainty that results from examining only a part of the data.

Reason : Statistical sampling is more scientific than testing based entirely on the auditor's own judgement because it involves use of mathematical laws of probability in determining the appropriate sample size on case to case basis. While under non-statistical sampling, the sample size and its composition are determined on the basis of the personal experience and knowledge of the auditor.

Statistical sampling is more objective and based on law of probability while non statistical sampling is simple in operation and based on auditor's personal experience. Statistical sampling is used in areas where population to be tested consists of large but similar items. In nonstatistical sampling, there is no specific pattern of sample selection involved in order to maintain an element of surprise in the audit, for instance, surprise cash check etc.

Statistical sampling provides a better description of large mass of data than a complete examination of total data, since, nonsampling errors such as processing and clerical mistake are not large.

Option b). Says, substantially low work is involved in statistical as compared to non-statistical sampling. Here, to select a sample is a great task using probability techniques. Hence, this is not the best difference.

Option c). In statistical sampling though sampling techniques are adopted but exercise of auditor's judgement is a must in this case also. Hence, this is also not a best difference.

Option d). Though this statement provides for an advantage of statistical sampling but there are still chances of inherent risks which cannot be found out inspite of adopting all possible techniques. Or it may also so happen that the sample selected does not contain any mistake and the sample not selected has got the main material misstatement which could change the audit opinion. Therefore, "option a" explicitly gives the Best distinguishing feature of statistical sampling as compared to non statistic sampling.

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