ACCA Advanced Audit and Assurance (AAA) Practice Exam

Which risk involves reaching an erroneous conclusion unrelated to the sample size?

1. Sampling risk

2. Non-sampling risk

3. Audit risk

4. Inherent risk

The correct answer is: Non-sampling risk

Non-sampling risk refers to the potential for errors or misjudgments in an audit that arise from factors other than the size or selection of a sample. This risk can involve various aspects of the audit process, such as misinterpretation of audit evidence, inappropriate application of audit procedures, or the presence of biases in judgment. Essentially, it reflects the risk of making incorrect conclusions based on the auditor's decision-making rather than the sampling strategy itself. Understanding this concept is crucial, especially since auditors cannot completely eliminate non-sampling risks. These risks might stem from improper assessment of controls, not following up on critical evidence, or inaccurate evaluations of the findings. Because they are unrelated to sample size, non-sampling risks can potentially lead to significant misstatements or incorrect audit opinions even if the sampling method used is statistically sound. The other types of risk mentioned, such as sampling risk, audit risk, and inherent risk, have different definitions and implications within the audit process. Sampling risk specifically relates to the possibility of drawing incorrect conclusions about a population based on a sample, whereas audit risk encompasses the overall risk of issuing an incorrect opinion on financial statements. Inherent risk pertains to the susceptibility of an account balance or class of transactions to material misstatement. Each of