Question

Which of the following best illustrates the concept of sampling risk?

• A. An A/P clerk pays $10,000 to the auditor to say that controls are effective when the sample evidence suggests that they are ineffective.
• B. The auditor misreads the dates on several bank reconciliations, causing her to accept a control as ineffective when in fact the control are effective.
• C. A sample of sales invoices happens to include a larger percentage of above limit credit sales without required explanations from management.
• D. Some vendor invoices are missing from voucher packets.

Answer 1

Correct answer is D) Some vendor invoices are missing from voucher packets.

Sampling risk represents the possibility that an auditor's conclusion based on a sample is different from that reached if the entire population were subject to audit procedure. The auditor may conclude that that material misstatement exist,when in actual it doesn't and it may also conclude that material mistatement doesnot exist when it actually does.

As vendor invoices are missing from voucher packets sample taken woulkd be wrong and auditor can make decision on basis of sample. Which makes sampling risk.