ACCA Advanced Audit and Assurance (AAA) Practice Exam

Stratification in audit sampling involves what?

1. Combining all items into one group

2. Dividing a population into similar sub-populations

3. Randomly selecting items without any criteria

4. Eliminating non-representative items from the population

The correct answer is: Dividing a population into similar sub-populations

Stratification in audit sampling is a technique used to enhance representativeness and improve the efficiency of the sampling process. By dividing a population into similar sub-populations, or strata, auditors can ensure that each segment of the population is adequately represented in the sample. This allows auditors to focus on specific areas of interest that may have varying levels of risk or different characteristics, which can lead to more precise and reliable audit results. When populations are stratified, each stratum is typically more homogeneous compared to the entire population, making it easier to draw conclusions about the individual strata. This targeted approach often results in increased accuracy in identifying errors or misstatements, as well as potentially allowing for smaller sample sizes and reduced audit risk. The other options provided do not utilize stratification effectively. Combining all items into one group overlooks the diversity within the population, randomly selecting items without criteria fails to leverage the benefits of stratification, and eliminating non-representative items does not involve creating sub-populations, which is the essence of stratification.