Auditing and Attestation- Certified Public Accountant (CPA) Practice Exam -

What is a primary advantage of statistical sampling for auditors?

1. Eliminate the risk of non-sampling errors

2. Minimize the failure to detect errors and fraud

3. Reduce the level of audit risk and materiality

4. Measure the sufficiency of the audit evidence obtained

The correct answer is: Measure the sufficiency of the audit evidence obtained

The primary advantage of statistical sampling for auditors lies in its ability to measure the sufficiency of the audit evidence obtained. Statistical sampling provides a systematic and objective way for auditors to draw conclusions about a population of data based on a representative sample. By using statistical methods, auditors can quantify the level of assurance that the sample provides about the entire population, allowing them to ascertain whether they have gathered enough evidence to support their conclusions. This method also enables auditors to estimate the total deviation rate or the total dollar amount of misstatements within the population, which helps in evaluating whether the level of evidence obtained is adequate to form an opinion on the financial statements. Furthermore, statistical sampling aids in setting reliable confidence levels and margin of errors, ensuring that the conclusions drawn from the sample are both relevant and valid. Other aspects, such as minimizing non-sampling errors or reducing audit risk, can also benefit from statistical sampling, but the fundamental advantage is about measuring sufficiency. It focuses on quantifying and evaluating the evidence gathered, which is critical in the context of audit objectives, ensuring that auditors can make justified assertions about the financial statements they are auditing.