Sampling Risk vs. Detection Risk
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There are many different types of risk associated with the auditing process. An effective auditor must take the risks into consideration during the auditing process as well as the relationships between the various risks. Discuss the difference in sampling risk and detection risk as well as the relationship between the two risks. What types of substantive procedures can an auditor use to restrict detention risk?
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Solution Summary
Your tutorial is 303 words plus a reference and discusses how sampling risk is a component of detection risk. Examples of sampling and non-sampling risks are given. Ways to restrict detection risk are given.
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Detection risk is a part of audit risk:
Audit risk = control risk x inherent risk x detection risk
Audit risk = control risk x inherent risk x [ sampling risk + non sampling risk ]
Sampling risk is the uncertainty resulting from the process of selecting and interpreting a sample. That is, the risk of selecting a sample that isn't representative of the population and/or making an incorrect inference based on sample results. Sampling risk is part of detection risk. However, detection risk also contains non-sampling ...
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