Question

A sample size of 50 purchase orders was selected for testing by the auditor. The results were above the desired deviation rate of 2%. The audit manager increased the sample size to 75 purchase orders. This is an example of

A. Stop-or-go sampling.
B. Stratified mean-per-unit sampling.
C. Block sampling.
D. Discovery sampling.

Answer 1

The auditor's action of increasing the sample size from 50 to 75 purchase orders after an initial higher-than-desired deviation rate is an example of stop-or-go sampling.

Step-by-step explanation:

When an auditor increases the sample size after finding a deviation rate that is higher than the desired level, this is an example of stop-or-go sampling. The premise of stop-or-go sampling is to initially test a smaller sample size and only proceed with a larger sample if the initial results exceed a predetermined threshold, such as an acceptable deviation rate. This process is not synonymous with stratified mean-per-unit sampling, block sampling, or discovery sampling.

In the scenario, the increase of the sample size from 50 to 75 purchase orders after the results showed a deviation rate above 2% aligns with the methodology of stop-or-go sampling.