D is corrent because audit sampling is the application of an audit procedure to less than 100% of the items within an account balance or class of transactions for the purpose of evaluating some characteristic of the balance or class.
A is incorrect because both statistical and nonstatistical sampling techniques are acceptable.
B is incorrect because both internally and externally generated evidence are acceptable for audit sampling.
C is incorrect because various procedures other than inquire and observation are possible when applying audit sampling (e.g., inspection and reperformance); also, the inquiry and observation techniques are not ordinarily used in statistical sampling applications.
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