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AICPA Exam CPA-Auditing Topic 2 Question 63 Discussion
Topic #: 2
When using classical variables sampling for estimation, an auditor normally evaluates the sampling results by calculating the possible error in either direction. This statistical concept is known as:
Choice 'a' is correct. The statistical concept of precision is used to describe the auditor's evaluation of sampling results by calculating the possible error in either direction.
Choice 'b' is incorrect. Reliability measures how frequently the procedure used will yield differences between the estimated value and the population value.
Choice 'c' is incorrect. Projected error is the auditor's best estimate of the error in the total population based upon evaluating the actual error rate in the sample results. The auditor then adds an allowance for sampling risk to develop a 'precision interval' within which the population is expected to fall.
Choice 'd' is incorrect. Standard deviation is a measure of the variability of a frequency distribution about its mean.
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