Define sampling risk and nonsampling risk.
What will be an ideal response?
Sampling risk refers to the possibility that the sample drawn is not representative of the population and that, as a result, the auditor will reach an incorrect conclusion about the reliability of a control, an account balance, or class of transactions based on the sample.
Nonsampling risk is the risk of auditor error and arises from the possibility that the auditor may sample the wrong population to test an assertion, fail to detect a misstatement when applying an audit procedure, or misinterpret an audit result. The uncertainty related to nonsampling risk can be controlled by adequate training, proper planning, and effective supervision.
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