Auditing - What is the Role of Sampling

The video tutorial discusses the importance of sampling in auditing, highlighting that it is often impractical to test all transactions due to time and cost constraints. It covers various sampling methods, including unrestricted random sampling, systematic random sampling, block selection, and haphazard selection. Additionally, it introduces monetary unit sampling (MUS), which focuses on high-dollar transactions using probability proportional to size techniques, allowing auditors to efficiently test riskier transactions.

Why might auditors choose to use sampling instead of testing all transactions?

• To ensure every transaction is checked

• To reduce time and cost constraints

• To avoid using random selection methods

• To increase the number of transactions tested

Which sampling method involves selecting every nth transaction?

• Unrestricted random sampling

• Block selection

• Systematic random sampling

• Haphazard selection

What is a characteristic of block selection in sampling?

• Picking documents haphazardly

• Selecting groups of consecutive items

• Choosing every 10th transaction

• Selecting transactions randomly

What does monetary unit sampling (MUS) focus on during substantive tests?

• The frequency of transactions

• The type of transactions

• The dollar value of transactions

• The number of transactions

Why is monetary unit sampling beneficial for auditors?

• It focuses on less risky transactions

• It selects low-value transactions

• It saves time by targeting high-dollar transactions

• It avoids using probability techniques