Distinguish between sampling risk and nonsampling risk
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Distinguish between sampling risk and nonsampling risk.
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Solution Summary
This posting answers a finance problem. It helps distinguish between sampling risk and nonsampling risk.
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Problem: Distinguish between sampling risk and nonsampling risk?
Solution:
According the Public Company Oversight Board (PCOB) AU section 350 of Professional Standards for audit sampling states that audit sampling is applying an audit procedure to less than 100 percent of the items in an account balance or class of transactions in order to evaluate characteristics of the balance or class (www.pcobus.org). The auditor will use his knowledge of specific account balances and transactions, which might have misstatements, in planning his audit procedures including audit sampling (www.pcobus.org). There will be some degree of uncertainty associated with audit sampling because of time and cost to evaluate all account balances and class of transactions along with the negative consequences of ...
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