Jones, CPA, believes the industry-wide deviation rate of client billing errors is 3% and has established a tolerable deviation rate of 5%. In the review of client invoices, Jones should use
A)discovery sampling.
B)attributes sampling.
C)stratified sampling.
D)variables sampling.

Question

Quizplus · Accepted Answer

Jones should use attributes sampling since it is the appropriate method to use when the auditor is interested in a binary outcome (an error is present or not), as in the case of billing errors. Additionally, by using attribute sampling, Jones can determine whether the error rate exceeds the tolerable deviation rate of 5%. Discovery sampling is used when the auditor has a suspicion of fraud. Stratified sampling is used when the auditor wants to control for variables, and variables sampling is used when the auditor wants to estimate the monetary value of a population.

Jones, CPA, Believes the Industry-Wide Deviation Rate of Client Billing