Which of the following is the MOST effective sampling method for an IS auditor to use for identifying fraud and circumvention of regulations?
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A. B. C. D.C.
This is an example of the discovery sampling technique, where an auditor examines samples until an exception is found.
Statistical sampling is the MOST effective sampling method for an IS auditor to use for identifying fraud and circumvention of regulations.
Statistical sampling is a method of selecting a representative sample from a population using random sampling techniques. This method allows the auditor to make statistical inferences about the population based on the characteristics of the sample.
The main advantage of statistical sampling is that it provides a higher level of assurance about the accuracy of the audit results. By selecting a sample randomly, the auditor reduces the risk of bias and ensures that all items in the population have an equal chance of being selected. This helps to minimize the risk of both overestimating and underestimating the extent of fraud and circumvention of regulations.
Stop-or-go sampling, variable sampling, and discovery sampling are all alternative sampling methods, each with its own strengths and weaknesses.
Stop-or-go sampling involves stopping the audit procedure as soon as a predetermined number of errors or irregularities are detected. This method is useful when the auditor is more concerned about the presence of errors than their frequency or extent. However, it is not appropriate for identifying fraud or circumvention of regulations as it does not provide a representative sample.
Variable sampling involves selecting larger sample sizes when the expected error rate is higher and smaller sample sizes when the expected error rate is lower. This method can be more efficient than fixed sample sizes, but it does not necessarily provide a representative sample and may miss some instances of fraud or circumvention of regulations.
Discovery sampling involves selecting items based on the auditor's judgment and knowledge of the population. This method can be useful when the population is not homogenous or when specific items are more likely to contain errors or irregularities. However, it is not as reliable as statistical sampling for identifying fraud and circumvention of regulations as it is more prone to bias and subjectivity.
In conclusion, statistical sampling is the most effective method for an IS auditor to use for identifying fraud and circumvention of regulations. It provides a higher level of assurance about the accuracy of the audit results and minimizes the risk of bias and underestimating the extent of fraud and circumvention of regulations.