The use of statistical sampling techniques in an audit of financial statements does not eliminate judgmental decisions.

Question:

The use of statistical sampling techniques in an audit of does not eliminate judgmental decisions.
a. Identify and explain four areas in which judgment may be exercised by CPAs in planning
a statistical test of controls.
b. Assume that the auditors’ sample shows an unacceptable deviation rate. Discuss the various actions that they may take based upon this finding.
c. A nonstratified sample of 80 vouchers is to be selected from a population of 3,200. The vouchers are numbered consecutively from 1 to 3,200 and are listed, 40 to a page, in the voucher register. Describe four different techniques for selecting a random sample of vouchers for inspection.

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