Final Answer:
Sampling risk is the risk that the results of the sample are not indicative of the population. Option C is correct.
Step-by-step explanation:
Sampling risk refers to the potential discrepancy or divergence between the characteristics observed in a sample and the actual characteristics of the entire population from which the sample was drawn. It encompasses the chance that the sample, due to its limited size, might not accurately represent the entire population, leading to erroneous conclusions. This risk can arise from various factors, such as selecting an insufficiently representative sample, using an inappropriate sampling method, or encountering unexpected anomalies within the sample.
For auditors, sampling risk is critical as it directly impacts the reliability of audit conclusions. If the sample results misrepresent the population, it could lead to incorrect assessments or decisions regarding the financial statements' accuracy or compliance. Mitigating this risk involves careful planning, employing suitable sampling techniques, ensuring sample randomness, and validating the sample's representativeness.
Ultimately, sampling risk is inherent in sampling procedures, necessitating a balance between precision and practicality in auditing processes to minimize the potential for errors due to sample variability.
Correct Answer: C. Is the risk that the results of the sample are not indicative of the population.