Which of the following statements is true as it relates to nonstatistical and statistical sampling?
a. In nonstatistical sampling, sample size is determined by auditor judgment.
b. In statistical sampling, the sample must be randomly selected to give each unit in the population an equal chance to be included in the sample.
c. In nonstatistical sampling, evaluation is based on auditor judgment and projections are based on sample results.
d. All of these are true.
The correct answer and explanation is:
The correct answer is d. All of these are true.
Explanation:
Nonstatistical and statistical sampling are two approaches used by auditors when selecting samples for testing. Here’s a breakdown of the individual statements:
- In nonstatistical sampling, sample size is determined by auditor judgment:
- This is correct. In nonstatistical sampling, the auditor uses their professional judgment to determine the appropriate sample size based on factors like the nature of the population, risk, materiality, and the purpose of the audit. The auditor may consider factors like prior experience and specific client characteristics in deciding how large or small the sample should be.
- In statistical sampling, the sample must be randomly selected to give each unit in the population an equal chance to be included in the sample:
- This statement is also accurate. Statistical sampling relies on mathematical and probability theory to select samples. A key principle in statistical sampling is that each unit in the population must have a known, equal chance of being selected. This ensures that the sample is representative of the population and the results can be projected with a measurable level of confidence.
- In nonstatistical sampling, evaluation is based on auditor judgment and projections are based on sample results:
- This statement is true as well. Since nonstatistical sampling does not rely on the laws of probability, the evaluation of the results is largely based on the auditor’s judgment. The auditor makes conclusions about the entire population based on the sample, but there is no formal statistical methodology for projecting the sample findings onto the whole population.
Conclusion:
All of these statements reflect accurate characteristics of nonstatistical and statistical sampling. Nonstatistical sampling relies on the auditor’s judgment for determining the sample size and evaluating the results, while statistical sampling uses a more structured, probabilistic approach, including random selection to ensure that every unit in the population has an equal chance of being included.