QUESTION 4: (20 MARKS: 36 MINUTES) A. International Standard on Auditing (ISA) 530, "Audit Sampling" applies when the auditor has decided to use audit sampling in performing audit procedures. It deals with the auditor's use of statistical and non-statistical sampling when designing and selecting the audit sample, performing tests of controls or compliance tests, substantive tests, and tests of details, and evaluating the results from the sample. REQUIRED: (a) Explain TWO (2) reasons for using audit sampling in performing audit procedures. (4 Marks) (b) Describe TWO (2) sampling approaches that can be used in selecting an audit sample. (4 Marks) (c) Define the term "materiality" in the context of an audit of financial statements. (2 Marks) (d) Explain TWO (2) reasons why materiality is difficult to apply in practice. (4 Marks) B. International Standard on Auditing (ISA) 315, "Identifying and Assessing the Risks of Material Misstatement through Understanding the Entity and Its Environment" deals with the auditor's responsibility to identify and assess the risks of material misstatement in the financial statements, through understanding the entity and its environment, including the entity's internal control. REQUIRED: (a) Explain the concept of audit risk. (2 Marks) (b) Differentiate between environment risk and detection risk. (4 Marks)