An auditor tests a sample of transactions for proper authorization. She concludes that the control is not operating effectively, although it actually is. This is an example of:
A) sampling error.
B) sampling risk.
C) detection risk.
D) All of the above.

Question

Quizplus · Accepted Answer

This is an example of sampling risk, which is the risk that the auditor reaches an incorrect conclusion based on the sample tested. It is not a sampling error because the auditor is not making a mistake in the selection or execution of the sample, and it is not detection risk because the control is actually operating effectively but is being misinterpreted by the auditor.

An Auditor Tests a Sample of Transactions for Proper Authorization