Question

Harvey Jones, CPA, uses statistical sampling to test control procedures. What is a benefit of using statistical sampling?

1) It provides a means of mathematically measuring the sampling risk that result from examining only a part of the data.
2) It eliminates the use of judgment required of Jones because the AICPA has established numerical criteria for this type of testing.
3) It increases Jones' knowledge of the entity's prescribed procedures and their limitations.
4) It is required by generally accepted auditing standards.

Answer 1

A benefit of using statistical sampling is that it provides a means of mathematically measuring the sampling risk that results from examining only a part of the data. Correct option is 1)

Step-by-step explanation:

A benefit of using statistical sampling is that it provides a means of mathematically measuring the sampling risk that results from examining only a part of the data (option 1). Statistical sampling allows the auditor to draw conclusions about the entire population based on the results obtained from the sample.

Statistical sampling does not eliminate the use of judgment required by the auditor, as the AICPA has not established numerical criteria for testing control procedures (option 2). Instead, auditors must use their professional judgment to design appropriate sampling procedures.

While statistical sampling helps auditors gain knowledge of the entity's prescribed procedures and their limitations, it is not a requirement by generally accepted auditing standards (option 3 and 4).