An auditor is preparing to sample an entity's customer receivables for overstatement. A statistical sampling method that automatically provides stratification when using systematic selection is
A) Attribute sampling.
B) Ratio-estimation sampling.
C) Monetary-unit sampling.
D) Mean-per-unit sampling.

Question

Quizplus · Accepted Answer

Monetary-unit sampling (MUS) is a statistical sampling method that automatically provides stratification when using systematic selection. MUS involves selecting units with a probability proportional to their recorded monetary value, which results in large items being more likely to be selected for audit. This approach automatically stratifies the population by dollar value, which is beneficial for testing customer receivables for overstatement. Attribute sampling is not a good choice because it is used for attributes, such as the presence or absence of certain characteristics, rather than dollar amounts. Ratio-estimation sampling and mean-per-unit sampling are also not automatically stratified, and they do not directly take into account dollar values in the same way that MUS does.

An Auditor Is Preparing to Sample an Entity's Customer Receivables