Statistical sampling generally may be applied to test controls when the client’s internal control activities
A. Depend primarily on appropriate segregation of duties.
B. Are carefully reduced to writing and are included in client accounting manuals.
C. Leave an audit trail in the form of documentary evidence of compliance.
D. Enable the detection of material irregularities in the accounting records.
Answer:C
This answer is correct because statistical sampling may be applied when testing controls which leave an audit trail in the form of documentary evidence. Documentary evidence in the form of audit stamps, initials, calculations, etc., lends itself to tests of controls where the auditor’s objective is to determine the rate of compliance with the prescribed control.
