When the sample selection is done using probability proportional to size sample selection (PPS),
A) the actual number of units selected for testing may be more than the computed sample size.
B) the auditor must use systematic selection, rather than random selection of dollars.
C) population items with a zero recorded balance have no chance of being selected.
D) negative balances must be treated as positive balances.

Question

Quizplus · Accepted Answer

In PPS sampling, the probability of selecting an item is proportional to its size or recorded value. Therefore, population items with a zero recorded balance will not have a chance of being selected because they have zero size/value. The other statements are incorrect: A) the computed sample size determines the actual number of units selected, B) random or systematic selection can both be used with PPS sampling, and D) negative balances can be treated as negative balances.

When the Sample Selection Is Done Using Probability Proportional to Size