In the development of an audit program it is determined that to achieve specified precision and confidence a sample of 436 items from a population of 10,000 is adequate on a statistical basis.

Required:

a. Briefly define each of the following terms used in the above statement:

1. Population.

2. Sample.

3. Precision.

4. Confiderice.

b. If the population is 100,000 and the specifications for precision and confidence are unchanged from the situation above for a population of 10,000 , which of the following sample sizes could be expected to be statistically correct for the larger population: 436; 454; 3,000; 4,360? Justify your answer. (Your answer should be based on judgment and reasoning, rather than actual calculation.)

c. Statistical sampling techniques are being used in auditing. A sample is taken and analyzed to draw an inference or reach a conclusion about a population, but there is always a risk that the inference or conclusion may be incorrect. What value, then, is there in using statistical sampling techniques?