In statistical or nonstatistical sampling methods used in substantive testing, an auditor most likely would stratify a population into meaningful groups if
A) Monetary-unit sampling (MUS) is used.
B) The population contains both very high and very low recorded amounts.
C) The auditor's estimated tolerable misstatement is extremely small.
D) The standard deviation of recorded amounts is relatively small.

Question

Quizplus · Accepted Answer

Stratification is most useful when there are significant differences in recorded amounts within a population. If the population contains both very high and very low recorded amounts, then stratification can help the auditor to more effectively allocate resources and select a representative sample for testing. MUS, tolerable misstatement, or standard deviation are not directly related to the need for stratification.

In Statistical or Nonstatistical Sampling Methods Used in Substantive Testing