Which of the following is the BEST way for an IS auditor to reduce sampling risk when performing audit sampling to verify the adequacy of an organization's internal controls?
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A. B. C. D.D.
When performing audit sampling, there is always a risk of selecting a sample that is not representative of the entire population. This risk is called sampling risk. To reduce sampling risk, an IS auditor can take several measures, including:
A. Outsource the sampling process: Outsourcing the sampling process to a third-party vendor can reduce sampling risk, but it may not be the best solution. The IS auditor may not have control over the selection of the sample and the sampling methodology used by the vendor. The IS auditor may also have to rely on the vendor's expertise and judgment, which may not align with the organization's needs and objectives.
B. Decrease the sampling size: Decreasing the sample size can reduce sampling risk, but it may also reduce the precision and reliability of the results. If the sample size is too small, it may not be representative of the entire population, and the IS auditor may miss important control deficiencies.
C. Lower the sample standard deviation: Lowering the sample standard deviation can reduce sampling risk, but it may not be practical or feasible. The standard deviation is a measure of the variability of the data, and it is influenced by factors such as the complexity of the process, the quality of the data, and the nature of the transactions. Lowering the standard deviation may require changing the process or the data quality, which may not be possible or cost-effective.
D. Use a statistical sampling method: Using a statistical sampling method is the best way for an IS auditor to reduce sampling risk. Statistical sampling methods are based on probability theory and allow the IS auditor to select a sample that is representative of the entire population with a known level of confidence and precision. Statistical sampling methods also provide a means to measure and control sampling risk, by specifying the sample size, the sampling methodology, and the level of confidence and precision required.
Therefore, the correct answer is D, Use a statistical sampling method.