CA Intermediate · Auditing and Ethics · Audit Evidence

In the audit of Ramesh Traders Pvt Ltd, the auditor selects 40 invoices out of a population of 2,000 using a method where every invoice has an equal chance of selection, with no judgment bias, supported by a random number generator. Which statement best describes this?

This is random selection. Under SA 530, selecting items using a random number generator gives each invoice an equal chance of being chosen, and when results are evaluated using probability theory it qualifies as statistical sampling, unlike judgmental or haphazard selection.

AJudgmental selection, which allows statistical evaluation of results
BRandom selection, which permits statistical sampling if results are evaluated using probability theoryCorrect
CHaphazard selection, which is always statistical
DSelecting all items with a specific characteristic

Explanation

Under SA 530, random selection using random number generators gives every item an equal chance of selection and, with probability-based evaluation, qualifies as statistical sampling. Judgmental selection is not statistical, and haphazard selection lacks a structured technique and is non-statistical.

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