Exam IIA-CIA-Part1 topic 4 question 51 discussion

Attribute sampling involves testing the occurrence of a specific characteristic or attribute within a population. In this case, the internal auditor wants to determine whether payments to outside contractors have been charged to the proper account. Attribute sampling would involve selecting a sample of payments and examining each one to determine whether it has been correctly charged. This method allows the auditor to draw conclusions about the overall accuracy of the charges based on the sample results.

B. Probability-proportional-to-size sampling. When testing whether payments to outside contractors have been charged to the proper account, probability-proportional-to-size (PPS) sampling would be most useful. PPS sampling is a statistical sampling method that gives larger items in a population a higher chance of being selected. In this context, the "size" refers to the amount of the payment. This method is often used in monetary unit sampling. With PPS sampling, the auditor can focus on larger payments, which are more likely to have a significant impact on the financial statements. It helps ensure that the sample is representative of the total population in terms of monetary value, making it an efficient and effective method for testing the accuracy of payments to outside contractors.

B. Probability-proportional-to-size sampling. When testing whether payments to outside contractors have been charged to the proper account, probability-proportional-to-size (PPS) sampling would be most useful. PPS sampling is a statistical sampling method that gives larger items in a population a higher chance of being selected. In this context, the "size" refers to the amount of the payment. This method is often used in monetary unit sampling. With PPS sampling, the auditor can focus on larger payments, which are more likely to have a significant impact on the financial statements. It helps ensure that the sample is representative of the total population in terms of monetary value, making it an efficient and effective method for testing the accuracy of payments to outside contractors.