Question

Which of the following statements is false?

a. Top-stratum items are population items whose book values exceed the sampling interval and are therefore all included in the sample.
b. Because the auditor knows the amount of errors in the top-stratum (all items were evaluated), no estimate of errors is required.
c. Stratification of the population into several homogeneous sub-populations generally reduces audit efficiency.
d. The audit sampling evaluation reflects the sum of top-stratum items and the projected misstatement derived from lower-stratum items.
e. None of the above.

Answer 1

The false statement is letter "C": Stratification of the population into several homogeneous sub-populations generally reduces audit efficiency.

Step-by-step explanation:

Stratification is the method of grouping a population into subpopulations, with each group of units having similar characteristics. The efficiency of audits can be increased if the auditor stratifies a population by grouping it into different sub-populations since the variability of items will be reduced.