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Question 555 - CISA discussion

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One advantage of monetary unit sampling is the fact that

A.
results are stated m terms of the frequency of items in error
Answers
A.
results are stated m terms of the frequency of items in error
B.
it can easily be applied manually when computer resources are not available
Answers
B.
it can easily be applied manually when computer resources are not available
C.
large-value population items are segregated and audited separately
Answers
C.
large-value population items are segregated and audited separately
D.
it increases the likelihood of selecting material items from the population
Answers
D.
it increases the likelihood of selecting material items from the population
Suggested answer: D

Explanation:

Monetary unit sampling (MUS) is a statistical sampling method that is used to determine if the account balances or monetary amounts in a population contain any misstatements. MUS treats each individual dollar in the population as a separate sampling unit, so that larger balances or amounts have a higher probability of being selected than smaller ones. MUS then projects the results of testing the sample to the entire population in terms of dollar values, rather than error rates.

One advantage of MUS is that it increases the likelihood of selecting material items from the population. Material items are those that have a significant impact on the financial statements and could influence the decisions of users. By giving more weight to larger items, MUS ensures that material misstatements are more likely to be detected and reported. MUS also reduces the sample size required to achieve a desired level of confidence and precision, as compared to other sampling methods that do not consider the value of items.

4: Monetary unit sampling definition --- AccountingTools

5: How Does Monetary Unit Sampling Work? - dummies

6: Audit sampling | ACCA Qualification | Students | ACCA Global

asked 18/09/2024
mohammed rafiuddin
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