Because of the importance of tests of controls for acquisitions and cash disbursements,it is common in this audit area to use
A)attributes sampling.
B)variables sampling.
C)probability-proportional-to-size sampling.
D)block sampling.

Question

Quizplus · Accepted Answer

Attributes sampling is the best choice for tests of controls for acquisitions and cash disbursements. This is because it is used to test whether a control is operating effectively or not, by testing a sample of transactions to determine whether they comply with the control being tested or not. In this audit area, we are interested in testing whether controls around acquisition and cash disbursements are being followed and whether purchases or disbursements are being made in accordance with the company's policies and procedures. Therefore, attributes sampling is the best choice as it allows auditors to check for compliance or deviation from established controls. Variables sampling could be used for substantive testing to estimate the monetary value of errors or misstatements but it is not suitable for tests of controls. Probability-proportional-to-size sampling and block sampling are also not as effective in testing controls, as they are better used for large populations or when transactions have a uniform size.

Because of the Importance of Tests of Controls for Acquisitions