Final answer:
In selecting a sample for variables testing, an auditor must consider the desired precision, standard deviation, and acceptable risk level to ensure the sample accurately represents the population.
Step-by-step explanation:
When selecting a sample for variables testing, an auditor must consider various factors to ensure the accuracy and reliability of the test results. These factors include the desired precision, the known or estimated standard deviation, and the acceptable risk level, also known as the confidence level.
The desired precision reflects how close the sample's results need to be to what the true value in the population might be. Standard deviation is a measure of variability or spread in a set of data and gives an idea of how much the data deviate from the average value.
Acceptable risk level pertains to the probability that the auditor is willing to take in accepting a sample that does not reflect the true population parameter. It is important for the auditor to balance these elements to achieve a sample that accurately represents the population without requiring an unnecessarily large sample size.