Problem

Following is a set of situations that may or may not involve sampling.1. An auditor is exa...

Following is a set of situations that may or may not involve sampling.

1. An auditor is examining loan receivables at a local bank. The population of loans contains two strata. One stratum is composed of 25 loans that are each greater than $1 million. The second stratum contains 450 loans that are less than $1 million. The auditor has decided to test all loans greater than $1 million and 15 loans less than $1 million.

2. Assume the same facts as number 1 except that the auditor decides to apply analytical procedures to the second stratum of loans.

3. An auditor has haphazardly selected 30 sales invoices to be examined for proper pricing of the goods purchased by the customer.

4. The prepaid insurance account is made up of four policies that total $45,000. The auditor has decided that this account is immaterial and decides that no policies will be examined.

Required:

Indicate which situations involve audit sampling (statistical or nonstatistical) and why.

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