External Audit

1. An auditor accumulates sufficient and relevant evidence to be able to express an opinion about the fair presentation of Financial Statements of the client company. While accumulating evidence, the auditor selects samples of transactions and account balances. Can you describe what is sampling risk and how to control it?

2. How does sampling risk compare with nonsampling risk? Please comment.

3. In selecting items for examination, an auditor considered three alternatives: (a) random number table selection, (b) systematic selection, and (c) random number generator selection. Which, if any, of these methods would lead to a random sample if properly applied?

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