Final answer:
If the internal auditor used nonstatistical sampling instead of statistical sampling, the confidence level could not be quantified, and the precision or error bound would likely be larger. With nonstatistical sampling, the reliability of the projected value, such as inventory valuation, would also typically decrease due to increased variability and the larger role of the auditor's judgment.
Step-by-step explanation:
If the internal auditor had used nonstatistical sampling instead of statistical sampling, then the confidence level could not be quantified.
When nonstatistical sampling methods are used, the auditor's judgment plays a crucial role in selecting the sample, and as such, the associated risk cannot be measured in exact terms as it can with statistical sampling, where the risk of incorrect acceptance and confidence levels can be quantitatively assessed.
This judgment-based approach can lead to larger precision, which means that the error bound or interval around the sample estimate could be larger.
Moreover, with a smaller sample size that might be employed in nonstatistical sampling, the variability might increase, and subsequently, the reliability of the projected value might be augmented due to increased uncertainty.
In summary, for a firm wishing to increase its level of confidence, it would need to increase the size of the sample if it kept the error bound the same. Conversely, if the firm kept the sample size but wanted a smaller error bound, it would need to accept a lower confidence level.
Hence, when comparing with statistical sampling where the sample size, error bound, and confidence level are inextricably linked, nonstatistical sampling lacks this clear relationship, often causing approximation to be less accurate and leading to further implications such as a less reliable projected inventory valuation.