Which statistical sampling approach would an internal auditor typically utilize if she wishes to test for fraud and the expected deviation rate is very low?

The correct answer is C. Discovery sampling. Discovery sampling is typically used when testing for fraud, especially when the expected deviation rate is very low. This method is designed to detect at least one occurrence of a specific characteristic (such as fraud) within a given sample size, making it effective for…

Performing the Engagement

Question

Options

AStratified sampling
BAttribute sampling
CDiscovery sampling
DHaphazard sampling

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(33 responses)

A
3% (1)
B
3% (1)
C
88% (29)
D
6% (2)

Explanation

Discovery sampling is typically used when testing for fraud, especially when the expected deviation rate is very low. This method is designed to detect at least one occurrence of a specific characteristic (such as fraud) within a given sample size, making it effective for identifying rare but critical issues. It is particularly useful when the auditor suspects that fraud may exist but expects it to be infrequent.

Topics

#discovery sampling#fraud detection#statistical sampling#deviation rate

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