Using nonstatistical sampling, which of the following courses of action would an auditor most likely follow in planning a sample of cash disbursements if the auditor is aware of several unusually large cash disbursements?
A)Set the tolerable deviation rate at a lower level than originally planned.
B)Identify the large and unusual disbursements as individually significant and test 100 percent.
C)Increase the sample size to reduce the effect of the unusually large disbursements.
D)Continue to draw new samples until all the unusually large disbursements appear in the sample.

Question

Quizplus · Accepted Answer

Nonstatistical sampling allows auditors to use judgement and risk assessment to determine the sample size and selection. In this case, the auditor has identified several unusually large cash disbursements, which may indicate a higher risk of material misstatement. The best course of action is to identify these large and unusual disbursements as individually significant and test 100 percent to obtain assurance that they are properly recorded and supported. This approach targets the specific risk identified and ensures that the high-risk transactions are covered. Setting a lower tolerable deviation rate, increasing the sample size, or continuing to draw new samples would not necessarily address the specific risk identified by the unusually large cash disbursements.

Using Nonstatistical Sampling, Which of the Following Courses of Action