Which statement about statistical sampling in auditing is true?

• A. Sampling methods are used by auditors in both testing of controls and substantive testing.
• B. In as much as audits are test-based, generally accepted auditing standards require the use of statistical sampling methods whenever the auditor decided to examine only a part of the population.
• C. Although statistical sampling may be applied to test controls, it is required for substantive testing purposes.
• D. Statistical sampling methods are more appropriate for testing of controls when the auditor elects to reprocess transactions, than when controls are tested by means of document examination.

Answer: (A)

Statistical sampling in auditing can be used for both tests of controls and substantive testing. The main idea is to draw conclusions about a population by examining a representative sample and to quantify the risk that the sample leads to an incorrect conclusion. For testing controls, sampling helps determine whether a control operates effectively by evaluating a subset of control occurrences and estimating the overall control reliability. For substantive testing, sampling allows the auditor to infer whether account balances or transactions are fairly stated by testing a sample and projecting the findings to the population, with an explicit sampling risk.

This flexibility is why the statement is true: auditors routinely apply sampling methods in both types of testing, choosing statistical or non-statistical approaches based on judgment, risk, and materiality. The other options overstate requirements or preferences—for example, they imply statistical sampling must be used whenever part of a population is examined, or that it is required for substantive testing, or that one type of testing is inherently more suited to sampling than the other.