The auditor must define the population to which sampling relates if the auditor is to use statistical sampling for substantive tests of account balances.

Question

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Defining the population is a crucial step in statistical sampling as it determines the sample size and helps the auditor to draw valid inferences about the account balance being tested. Without defining the population, it is difficult to ensure that the sample drawn is representative of the entire population and the results of the sample can be projected to the population as a whole. Therefore, it is essential for the auditor to define the population before using statistical sampling for substantive tests of account balances.

The Auditor Must Define the Population to Which Sampling Relates