Auditing standards provide general guidance to auditors regarding audit sampling but do not require statistical versus nonstatistical sampling or specify which sampling method auditors should use. Search the Internet for “PCAOB Audit Sampling” or go to pcaobus.org to locate the PCAOB’s auditing standard related to sampling (AU Section 350) and refer to the standard to answer the following questions.

Required

1. What are the costs and benefits of using statistical sampling versus nonstatistical sampling?

2. What is the relationship among audit risk, sampling risk, and nonsampling risk?

3. When is sampling not an appropriate method of performing tests of controls (refer to paragraph 32 of AU Section 350)?

4. Define the risk of assessing control risk too low and the risk of assessing control risk too high.

5. How do these risks impact the efficiency and effectiveness of the audit?