Which of the following describes sampling risk?
Correct answer: C. The risk that the sample does not reflect the population
- A. The risk of the auditor carrying out a test the wrong way round
- B. The risk of reliance on unsuitable audit evidence
- C. The risk that the sample does not reflect the population
- D. The risk of the auditor reaching the wrong conclusions from testing
Explanation
Sampling risk arises when the selected sample does not adequately represent the population, causing a conclusion different from one based on testing the entire population. Errors in applying an audit procedure are non-sampling risks.
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About Auditing
Auditing examines accounting records and financial statements to determine whether they present a reliable and fairly stated position. The subject covers audit objectives, internal controls, audit evidence, materiality, vouching, verification, working papers, auditor independence, audit reports, and the distinction between an audit and accounting or investigation.
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